Merchant Discount Rate (MDR)

Why it matters in travel

In travel, the headline MDR is rarely the whole story — high-value bookings, cross-border cards and commercial cards all push the effective rate higher than the headline. Watching effective MDR by brand and by route is the basis of any cost-reduction work.

A single percentage point on MDR sounds small until it is multiplied by an annual card volume that runs into the tens of millions. Travel margins do not absorb percentage points easily, especially on third-party product where the gross margin is already in single digits. The same booking effectively costs the business twice — once at deposit, once at balance — and if both legs route through a higher-rate category the cumulative drag is real.

The teams that get MDR right do it by reading their own data, not the acquirer’s marketing material. They know which BIN ranges, which currencies and which markets push them into expensive categories, and they negotiate against that evidence. The teams that get it wrong sign a headline rate, never check the effective rate per booking, and only notice the gap when net margin starts moving the wrong way.

How felloh helps

felloh exposes effective MDR at the booking level so travel finance teams can see where cost actually lands and use real evidence in acquirer negotiations.