If you run or are setting up a CBD e-commerce, sooner or later you will come across the acronym MDR. It is a fundamental concept that determines how much money you keep on every sale. And in the cannabis sector, understanding MDR properly can mean thousands of euros of difference per year.
| 4.5% typical MDR in the CBD sector in Europe | €0.30 fixed fee per transaction at WeedsPayments | ~€135 in fees for every €3,000 sold |
What does MDR mean?
MDR stands for Merchant Discount Rate. It is the percentage that the acquiring bank and the payment processor keep from every transaction processed with a card.
In plain terms: if you sell a product for €100 and your MDR is 4.5%, you receive €95.50 in your account. The remaining €4.50 is split between the card-issuing bank, the network (Visa/Mastercard) and the processor.
“MDR is not an avoidable cost — it’s the price of being able to accept cards. The key is understanding and negotiating it well.”
Why is MDR higher in CBD than in other sectors?
A clothing e-commerce can pay an MDR of 1.5% – 2%. A cannabis e-commerce typically pays between 3.5% and 5.5%. The difference is the risk perceived by the acquiring bank:
- Historically higher chargeback rates in the sector.
- Regulatory uncertainty in some European markets.
- Fewer banks willing to work with this type of merchant.
- Additional compliance cost the bank has to absorb.
A high MDR in CBD is not abuse — it reflects the real cost the bank assumes when processing payments in a higher-risk sector. As the sector matures and chargeback ratios drop, MDRs will tend to come down. It is already happening.
Real MDR breakdown: where does each euro go?
| Component | Typical percentage |
|---|---|
| Interchange fee (issuing bank) | 1.5% – 2.0% |
| Scheme fee (Visa / Mastercard) | 0.2% – 0.4% |
| Acquirer / processor margin | 1.5% – 2.5% |
| Fixed fee per transaction | €0.15 – €0.35 |
| TOTAL (final merchant MDR) | 3.5% – 5.5% + fixed fee |
How to calculate the real impact on your business
The formula is simple: MDR (%) × monthly volume + fixed fee × number of transactions.
Practical example with WeedsPayments (MDR 4.5% + €0.30/transaction):
| Scenario | Calculation and result |
|---|---|
| Monthly volume: €5,000 / 100 transactions | €225 (4.5%) + €30 (€0.30×100) = €255/month in fees |
| Monthly volume: €20,000 / 350 transactions | €900 (4.5%) + €105 = €1,005/month in fees |
| Monthly volume: €60,000 / 900 transactions | €2,700 (4.5%) + €270 = €2,970/month in fees |
Tip: always include MDR in your cost structure when calculating margins. An MDR of 4.5% on a product with a 30% margin reduces that margin to 25.5%. It is not an invisible expense — it is part of the cost of selling online.
Can MDR be negotiated?
Yes, but it depends on volume. Most CBD-specialised processors have fixed rates for small merchants (< €20,000/month) and are willing to negotiate above certain volume thresholds.
- Below €20,000/month: standard rate, little room to negotiate.
- €20,000 – €100,000/month: possibility of negotiating a reduction of 0.3 – 0.5 points.
- Above €100,000/month: real negotiation with bespoke conditions.
At WeedsPayments we work with a standard MDR of 4.5% + €0.30, with a review of conditions after 3 months of operation for merchants with a good track record and growing volume.
“The lowest MDR isn’t always the best deal. A stable processor at 4.5% is worth far more than an unstable one at 3%.”
