MDR
Also called: Merchant Discount Rate, merchant discount rate
What is MDR?
MDR, the merchant discount rate, is the percentage deducted from a transaction for accepting a card or certain digital payments. It is shared between the acquiring bank, the card network and the issuing bank.
Why MDR matters
On thin margins, MDR is a real cost. A 1.5% deduction on a 5% net margin business is nearly a third of the profit on that sale, which is why UPI adoption moved so quickly.
MDR formula
Net received = Transaction value × (1 − MDR) − fixed fees
Blend the rates by mix to get your true cost of accepting payments.
How MDR works in practice
Know your effective rate by instrument — credit cards typically cost more than debit — and read the deduction in the settlement report rather than the headline rate quoted at signup.
Frequently asked questions
Person-to-merchant UPI has not carried MDR the way cards do, which is a major reason merchants prefer it.