Merchant Discount Rate (MDR)

Definition

The total fee charged to a merchant for processing a payment card transaction, expressed as a percentage of the transaction value plus a fixed per-transaction fee. The MDR comprises three components: the interchange fee (paid to the issuing bank), the card network assessment fee (paid to Visa/Mastercard), and the acquirer's markup. MDR varies by merchant size, industry, card type, and geographic region, and is a significant cost consideration for businesses with high card payment volumes.