Merchant Discount Rate (MDR)

Question 1 Which of the following statements is/are correct with respect to a Merchant Discount Rate (MDR)?

a) It is a charge that merchants pay every time a debit or credit card is swiped at their end for a transaction by a customer.
b) High MDR reduces the profit margin of a merchant.
c) Both a and b
d) Neither a nor b

Question 2 : MDR is charged at some percentage (typically 1%) of the transaction done through a debit or a credit card. This charge is used to fund which of the following components?

a) Cost incurred in running the Point of Sale (PoS) machine.
b) Network fee to network providers like MasterCard, Visa or Rupay.
c) Interchange - the charge paid by the company that has installed the PoS machines to the issuing bank.
d) All of the above.

Answers

1) c
2) d