📈 EconomyUPSC 2018Fundamentals of Economy

Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news?

aThe incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.

bThe amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.

cThe charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.

dThe incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.

✓ Correct answer: c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.

ExplanationThe Merchant Discount Rate (MDR) is a fee charged to merchants by banks or payment gateways for accepting payments from their customers and processing digital trans- actions such as payments made through debit cards, credit cards or other electronic means.It is typically a small percentage of the transaction amount and is used to cover the costs of processing the payment.167

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Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news?

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