New SIDBI Grade A New Batch Starts on Nov 18

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    Question

    Which of the following regarding Merchant Discount Rate (MDR) is NOT true?

    A It is applicable to both debit and credit card transactions Correct Answer Incorrect Answer
    B Its ceiling is determined by Government of India Correct Answer Incorrect Answer
    C It is borne by the merchant. Correct Answer Incorrect Answer
    D It goes to the bank providing card, PoS terminal and network provider Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The ceiling is fixed by RBI. It is applicable to debit card, credit card, BHIM, UPI, AePS transactions. As per RBI norm, the merchant can't pass on this burden to consumer. Since it reduces the profit margin of merchants, they (especially small merchants) prefer cash payment

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