Merchant Discount Rate (MDR) is the fee charged to merchants by banks or payment service providers for processing digital payments such as credit cards, debit cards, or UPI.
MDR is a percentage of the transaction amount that merchants pay to banks, payment gateways, or card networks for facilitating digital transactions.
When a customer pays using a card or digital method, the merchant receives the payment after deducting MDR charges.
In India, MDR rules are influenced by the Reserve Bank of India. For example, MDR on UPI and RuPay debit cards is often zero for certain transactions to promote digital payments.
"If a customer pays ₹1,000 via credit card and MDR is 2%: 👉 Merchant receives ₹980 (₹20 deducted as fee)"