Q. With respect to Merchant Discount Rates (MDR), consider the following statements:
1.It is the cost paid by a merchant to a bank for accepting payment from their customers via digital means.
2.Cardless cash withdrawal can have negative implications for MDR fee-generating payment form factors.
Which of the statements given above is/are correct
Answer: C
Notes:
- Statement 1 is correct: MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. The merchant discount rate is expressed in the percentage of the transaction amount. Presently, it is applicable for online transactions and QR-based transactions.
- The amount that the merchant pays for every transaction gets distributed among three stakeholders–the bank that enables the transaction, vendor that installs the point of sale (PoS) machine and the card network provider such as Visa, MasterCard, RuPay.
- Statement 2 is correct: Cardless cash withdrawal can reduce the need to carry a debit card. Prima facie, this step seems negative for MDR fee-generating payment form factors.
