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UPSC 2018: Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news ?
(a)The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.
(b)The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.
(c)The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.
(d)The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.
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Not attemptedCorrect Answer: (c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.
The Merchant Discount Rate (MDR) is the percentage fee that a merchant’s bank (acquirer) deducts from each card transaction for providing the infrastructure to accept the payment; it is therefore a charge imposed on the merchant, not an incentive or cashback to the customer. ([congress.gov](https://www.congress.gov/crs-product/IF11893?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2018 Indian Economy question?▼
The correct answer is option (c): The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Digital Payments & Financial Inclusion question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2018, GS Paper 1, as Question 6. It falls under Indian Economy > Digital Payments & Financial Inclusion.
What is the difficulty level of this UPSC question?▼
This question is rated "easy". It tests basic recall and most well-prepared aspirants should answer it correctly.
How many UPSC Prelims questions have been asked from Digital Payments & Financial Inclusion?▼
UPSC has asked 20 questions from Digital Payments & Financial Inclusion (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.