Please don't worry, Will. It's very common to do worse on the day than your normal standard, and piano has its own special problems, as the instrument you play on rarely responds in the same way as the one you have at home.
A merit is definitely no reason to quit! It shows you performed better than the average candidate at that grade, and should encourage you to feel you are playing well. Remember that the exam is just a snapshot on a single day, and says little about your usual playing standard - your teacher is a much better judge of that.
All the best with your future playing. Enjoying the piano is the main thing, not having a piece of paper with "distinction" on it - though I admit it does make you feel great to achieve the latter, and I hope you do for grade 7