MDR (Merchant Discount Rate)
MDRThe percentage fee a payment gateway charges merchants for processing card or UPI transactions, typically ranging from 0% to 2.5% depending on instrument and merchant category.
Merchant Discount Rate (MDR) is the headline fee structure for payment gateways. In India it varies significantly by payment method: UPI is often 0% for merchants (per RBI directive), debit cards are capped at 0.4–0.9%, credit cards run 1.5–2.5%, and international cards can reach 3.5% or higher.
MDR is negotiated per merchant based on volume, merchant category code, and risk profile. Established gateways like Razorpay, Cashfree, PhonePe, and Paytm publish standard rates but large merchants negotiate custom slabs.
Reconciliation-wise, MDR variance is the gateway equivalent of marketplace commission variance — checking that the rate actually applied per transaction matches the rate in your agreement. Since MDR slabs change based on card network and instrument type per transaction, verifying this manually is impractical; rate-card-aware reconciliation engines catch it per capture.