gs1medium
Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news?
- A.The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.
- B.The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.
- C.The charge to a merchant by a bank for accepting payments from his customers through the bank's debit cards.
- D.The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.
▶ Answer & Explanation
Correct answer: C. The charge to a merchant by a bank for accepting payments from his customers through the bank's debit cards.
The Merchant Discount Rate (MDR) is a fee that merchants pay to banks or payment processors for the privilege of accepting credit and debit card payments. This fee covers various costs associated with card transactions, including processing fees, fraud prevention, and compliance. It is essentially a cost of doing business for merchants who accept card payments.
Source: UPSC gs1 2018