Every credit card transaction is a five-way handshake that happens in under two seconds. Tap the card. Watch it unfold. Meet everyone in the room.
No reading required. Just touch the card to start the transaction. Everything else will happen on its own. (You can replay any time.)
All five of these players were just involved in your transaction. They each have a job. They each get paid.
The authorization — the bit you just experienced — is the fast part. But the transaction isn't actually done. Money hasn't moved yet. What happens over the next 3 days is where it gets interesting.
Money hasn't moved yet. Here's what happens next — over the next 72 hours, invisibly.
Your card gets approved in ~1.4 seconds. HDFC puts a hold on ₹4,200 of your credit limit. No money has actually moved. Swiggy hasn't received anything yet — they just got a "yes, good for it."
At the end of each day, Swiggy's system batches up every transaction from the day and submits them to Razorpay (their gateway). Razorpay packages these into a clearing file and sends it through Visa to each issuing bank.
This is when HDFC gets the actual transaction details — exactly what was bought, when, and for how much. They match it against the authorization hold from earlier.
Now the money actually moves. HDFC transfers funds to Visa's settlement bank. Visa nets out all the transactions between banks and moves the right amounts to each acquirer. Razorpay deposits the net amount into Swiggy's account.
But here's the part that changes the number: the Merchant Discount Rate. Swiggy doesn't get ₹4,200. They get slightly less.
When you pay ₹4,200, Swiggy doesn't receive ₹4,200. The MDR — roughly 1.5–2% — is taken out before the merchant sees a rupee. Here's who gets what.
You've seen how MDR works. Now here's where it shows up in your life — and what you can do about it.
You're at an electronics showroom. ₹80,000 TV. You pull out your credit card. The salesperson says:
The MDR is a contract between the merchant and their bank — you are not party to it. The merchant chose to accept cards. The 3% surcharge isn't a fee you legally owe; it's the merchant passing their cost of acceptance onto you — and often marking it up.
This is a grey zone. RBI guidelines discourage surcharging, but enforcement is weak. It happens constantly on big-ticket purchases — jewellery, electronics, car accessories.
Authorization → Clearing → Settlement. The MDR split. The showroom surcharge. You understand more about what happens when you tap your card than most people who've been using one for years. Up next: getting one.