The Collaborative International Dictionary of English v.0.48:

Bank discount \Bank discount\
   A sum equal to the interest at a given rate on the principal
   (face) of a bill or note from the time of discounting until
   it becomes due.
   [Webster 1913 Suppl.]

The Collaborative International Dictionary of English v.0.48:

Discount \Dis"count`\, n. [Cf. F. d['e]compte. See Discount,
   v. t.]
   1. A counting off or deduction made from a gross sum on any
      account whatever; an allowance upon an account, debt,
      demand, price asked, and the like; something taken or
      deducted.
      [1913 Webster]

   2. A deduction made for interest, in advancing money upon, or
      purchasing, a bill or note not due; payment in advance of
      interest upon money.
      [1913 Webster]

   3. The rate of interest charged in discounting.
      [1913 Webster]

   At a discount, below par, or below the nominal value;
      hence, colloquially, out of favor; poorly esteemed;
      depreciated.

   Bank discount, a sum equal to the interest at a given rate
      on the principal (face) of a bill or note from the time of
      discounting until it become due.

   Discount broker, one who makes a business of discounting
      commercial paper; a bill broker.

   Discount day, a particular day of the week when a bank
      discounts bills.

   True discount, the interest which, added to a principal,
      will equal the face of a note when it becomes due. The
      principal yielding this interest is the present value of
      the note.
      [1913 Webster]

WordNet (r) 3.0 (2006):

bank discount
    n 1: interest on an annual basis deducted in advance on a loan
         [syn: discount rate, discount, bank discount]