Merchant Acquiring Fee (Merchant Discount Rate) Income
Earning the merchant discount rate (MDR) from a merchant whose POS terminal is managed by the bank.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Merchant Account (MDR Deducted from Settlement) | Liability (−) | 15.00 | - |
| Merchant Discount Revenue (Acquiring) | Revenue (+) | - | 15.00 |
💡 Accountant's Note
The MDR is the total fee charged to the merchant (e.g., 1.5% of transaction value). Out of this, the acquiring bank pays the issuing bank the interchange fee, pays the card scheme its network fee, and retains the remainder as its own revenue.
Practitioner & Systems Framework
💻 ERP Architecture
Merchant acquiring is managed in the bank's Merchant Management System (MMS) or card platform. The MDR is deducted from each batch settlement to the merchant. The net settlement (after MDR deduction) is credited to the merchant's account. Reconciliation between the MMS and GL is done daily or weekly.
⚠️ Audit Flags
Auditors verify MDR rates in the merchant agreement match what is actually charged. Undisclosed MDR charges are a regulatory issue. CBJ has guidelines on maximum MDR rates for certain merchant categories. Merchant chargeback exposures must be monitored.
📄 Required Documentation
Merchant agreement showing MDR rate, settlement batch report, MMS-to-GL reconciliation, CBJ MDR compliance certificate, and chargeback reserve balance.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.