About

• Merchant Discount Rate (MDR) is a fee charged from merchants or business owners when they receive payments from customers via digital methods such as credit and debit cards. ‌
• MDR compensates the bank issuing the card, the bank which installs the PoS (Point of Sale) terminal and network providers (MasterCard and Visa), and payment gateways for their services. 

Why in News?

• A recent survey has revealed that users of Unified Payments Interface (UPI) for digital payments are resisting the proposal to levy a fee on such transactions.
• As many as 75 per cent of respondents said that they will stop using UPI if a transaction fee is introduced.
• As UPI transactions are growing, fintech industry players and banks have been pushing the government and regulators to permit a Merchant Discount Rate (MDR) on UPI transactions. 
• The demand for MDR has led to small merchants and consumers expressing their discontent. Consumers believe that if MDR charges are introduced for merchants, they will in turn pass it on to them, just like it happens in the case of credit and debit cards. 
• It is quite common for small merchants to demand a processing charge from consumers who are using credit or debit cards to make payments.