Phase IFoundation
Background
Overview
MDR policy directly impacts financial inclusion, the operational costs for Micro, Small, and Medium Enterprises (MSMEs), the profitability of the financial sector, and the overall growth trajectory of India's digital economy. Its design and implementation complexity can create market distortions and administrative burdens, affecting various stakeholders.
Merchant Discount Rate (MDR) is a fee levied on merchants by banks and payment system providers for processing digital transactions. It is designed to cover the costs associated with transaction processing, settlement, and the maintenance of payment infrastructure.