Payments and fintech
Merchant discount rate (MDR)
The total fee a merchant pays to accept a card or digital payment.
Last reviewedWhat does Merchant discount rate (MDR) mean?
The merchant discount rate is the full fee a merchant pays, as a share of each payment, to accept cards or other digital payments. It bundles three pieces: interchange (to the issuer), scheme fees (to the card network) and the acquirer's own margin. Example: on a 100 sale with an MDR of 2 percent, the merchant receives 98. Of the 2, perhaps 1.5 is interchange, 0.1 is scheme fees and 0.4 is the acquirer's share. In India the government set a zero MDR on UPI and RuPay debit card payments from 2020, which shapes how payment firms there make money.
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Related terms
- Interchange feeThe fee the merchant's bank pays the cardholder's bank on each card payment.
- AcquirerThe bank or firm that lets a merchant accept card payments.
- Take rateThe share of each transaction's value that a platform keeps as revenue.
- Real-time paymentsAccount-to-account transfers that settle in seconds, at any hour.
- IssuerThe bank or firm that gives a customer a card and, for credit cards, takes the credit risk.
- Card scheme (card network)The network that sets the rules and connects issuers and acquirers, such as Visa or Mastercard.
- Basis points (bps)One hundredth of a percent: 100 basis points make 1 percent.
- Buy now, pay later (BNPL)Paying for a purchase in a few interest-free instalments, with the merchant paying a fee.