A merchant discount rate (MDR) is a fee charged to merchants by payment processors for each transaction. It is typically a percentage of the transaction amount, and it can vary depending on the type of card used, the merchant’s industry, and the payment processor. For example, a merchant might pay an MDR of 2% for each Visa transaction.
MDRs are important because they can impact a merchant’s profitability. Merchants should be aware of the MDRs charged by their payment processors and should factor them into their pricing decisions. In recent years, there has been a trend towards lower MDRs, as payment processors compete for business. This has benefited merchants, as it has reduced their costs of accepting credit cards.