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What is MDR Overcharge & Fee Creep in E-Commerce?

MDR Overcharge occurs when payment aggregators deduct fees higher than contracted baseline rates due to undocumented interchange surcharges or international card markups.
📐 Formula: MDR Variance = Actual Deducted Gateway Fees − (GMV × Base Contracted Rate)

Merchant Discount Rate (MDR) is the transaction processing percentage charged by payment gateways (Razorpay, Stripe, PayU). While merchants typically sign contracts for 2.0% + GST, actual deducted rates often creep to 2.6%–3.2%.

This fee creep is driven by premium corporate credit cards, international credit cards, and delayed settlement reconciliation.

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