What is Merchant Discount Rate

  • Merchant Discount Rate or MDR is a charge that merchants pay every time a debit card or credit card is swiped at their end for a transaction by a customer or the rate which banks charge a merchant when the customer uses a card for a transaction
  • This charge, typically 1% of the transaction, is divided among three parties – to the company that has installed the Point of Sale (PoS) machine (usually a ‘sponsoring bank’), the network provider (or, ‘settlement provider’) such as MasterCard, Visa or RuPay, and the card-issuing bank (the issuer).