Merchant Discount

Contrary to its name, a merchant discount, sometimes known as a merchant discount rate, refers to a fee charged by a payment processor to a merchant every time a card transaction is processed. The merchant discount rate is calculated as a percentage of the transaction amount and typically ranges between 1% to 3%.

For example, if a merchant submits a $500 transaction for processing, they will incur a $5 to $15 fee. Merchants who have a strong track record of maintaining low chargeback rates may be eligible for merchant discount rate reductions.