MDR (Merchant Discount Rate)
The Merchant Discount Rate is the total percentage an acquirer or PSP charges a merchant on each card transaction, bundling interchange, card-scheme fees, and the processor’s own margin. It is the headline processing cost a merchant sees, though it hides how that cost breaks down.
High-risk MDRs commonly run several times standard-risk rates, so a business processing 300,000 EUR a month can pay tens of thousands more a year than a low-risk merchant on identical volume. Understanding what sits inside the MDR is what lets you tell a fair high-risk price from an inflated one.
Interchange is the fee the card-issuing bank charges on each transaction, set by the card networks and passed through to the merchant as part of the processing cost.
An acquirer is the bank or financial institution that processes card payments on a merchant’s behalf, settling funds from the card networks into the merchant’s account.
A Payment Service Provider aggregates payment processing for merchants, typically holding the direct acquirer relationship itself and onboarding merchants under its own risk appetite, rather than each merchant applying to an acquirer directly.
Settlement is the transfer of cleared transaction funds from the card network or payment rail into the merchant’s bank account, net of fees, chargebacks, and any reserve withheld.