Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news ?
Show answer
Answer: C. Merchant Discount Rate (MDR) is the fee a bank charges a merchant for accepting card payments from customers. It is paid by the merchant, not to the merchant. So option C.
Watch for: Options that sound like incentives confuse students; MDR is a cost the merchant pays.
Why the other options are wrong
- A. Wrong because MDR is a charge on the merchant, not an incentive to it.
- B. Wrong because MDR is not a refund to customers.
- D. Wrong because MDR is a bank fee, not a government incentive.
Source to check: RBI circular 'Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions', December 2017
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.