Merchant Discount Rate (MDR) is also known as Transaction Discount Rate. It is the sum total of all the taxes and charges that are incurred when digital transactions are done. It includes processing charges for digital payments. In the 2019 budget speech, the Finance Minister mentioned that merchants and customers need not pay MDR in order to promote a cashless economy. You can read about The Reserve Bank of India: Functions and Composition in the given link.

Further readings:

1. Non Performing Assets (NPA) – Facts for UPSC GS-III
2. Topic-Wise GS 3 Questions for UPSC Mains