Merchant Discount Rate


DEFINITION of 'Merchant Discount Rate'

The rate chanrged to a merchant by a bank for providing debit and credit card services. The rate is determined based on factors such as volume, average ticket price, risk and industry. The merchant must set up this service with a bank, and agree to the rate prior to accepting debit and credit cards as payment.

BREAKING DOWN 'Merchant Discount Rate'

The average merchant discount rate is between 1-3% . However, for online merchants, the rate tends to be higher. This applies to merchants that deal both online and in-store. They will often pay a higher rate for their online sales.

  1. Debit Card

    An electronic card issued by a bank which allows bank clients ...
  2. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  3. Merchant Account

    A type of business bank account that allows a business to accept ...
  4. Credit Card

    A card issued by a financial company giving the holder an option ...
  5. Commercial Bank

    A financial institution that provides services, such as accepting ...
  6. Merchant Bank

    A bank that deals mostly in (but is not limited to) international ...
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