Glossary

Merchant Discount Rate (MDR)

The Merchant Discount Rate (MDR) is a fee charged to merchants by their payment processors for facilitating debit and credit card transactions. This fee is deducted from the total amount of each transaction processed, meaning the merchant receives the transaction amount minus the MDR. The MDR is crucial for covering various costs involved in the electronic payment process, including those related to payment security, fraud risk management, and transaction processing.

Components of the MDR typically include:

The rate of MDR can vary widely based on several factors, including:

Understanding the MDR and its components is essential for merchants, as these fees impact the overall profitability of accepting card payments. Merchants must consider these costs when setting prices for their goods or services and when choosing a payment processor, balancing the benefits of accepting card payments against the associated costs.

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