Merchant Account Secrets to Credit Card Processing, E-Commerce, SEO Website Design & SBA Business Loans.
by: Hellen
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Nationally, all processors pay the same percentage rate as determined by major credit card companies like Visa and Master Card. However, not all processors are alike; they offer different services, different levels of service and charge different rates and fees. It is important to understand how credit card processing works and what to look for when selecting a processor, and the information below hopefully assists with that process. The rates and fees depend on the type of business you have, whether you are swiping cards or keying cards along with the type of card you are accepting, and more. It is important to understand that varying rates will be applied to your processing activity as a function of the type of card, the manner in which the card is processed, and your adherence to required processing rules.
The lowest rate, and the rate you should receive most frequently, is your Qualified Rate. To receive the Qualified Rate on a given transaction, certain criteria apply including, but not limited to, swiping the card if you are a swiped merchant, or keying the card with Address Verification Service (AVS) if you are a keyed merchant. It is also essential that you close out (batch) your terminal each and every day.
The Mid-Qualified Rate will apply to certain card types and is a rate you should expect to be assessed with some regularity. Sales that are manually keyed are charged an additional percentage due to the fact that they are considered higher risk by the card associations than transactions that are swiped through a terminal. This percentage is a SURCHARGE. It is added to the qualified retail discount rate and transaction fee (This surcharge is also applied when a card is swiped, but the machine cannot read the magnetic stripe. When this occurs, the merchant has to manually key the card number into the machine. To the processor, this is a higher risk, so the sale downgrades into a mid-qualified transaction. Have you ever heard of frequent flier miles? These are special promotional cards that offer some kind of incentive to the card holder and also are processed at a higher discount rate. These incentives, such as frequent flier miles, discounts on automobiles, cash back, home rebates, etc., are funded entirely by merchants. Large companies that sponsor these cards typically do not offer their product for free; therefore merchants pay an extra percentage on top of the qualified rate in order to accept these cards. If the magnetic stripe cannot be read, or if it is one of the special incentive cards mentioned above, an extra percentage is added on to the qualified rate to compensate for the increased risk and/or the special promotional cards).
Non-qualified Rate - All credit card transactions that do not meet the requirements above fall into this category. They typically include but are not limited to: Visa/Master card Corporate Cards, foreign credit cards and all transactions NOT batched out within 48-72 hours. The Non-Qualified Rate is a premium priced rate assigned to certain card types, such as cards issued by non-U.S. banks. In addition, if the merchant fails to batch daily, all card activity will be downgraded to this rate. To minimize costs, ALWAYS batch each and every day.
"Historically credit card processing services were provided by banks that were members of the Visa or Master Card networks. Typically banks issued both credit cards and helped merchants process them, but over time the industry consolidated. Now, very few merchants use banks to actually process their credit cards. Banks found it was very expensive to employ sales representatives to convince every small business to accept credit cards, and they began outsourcing the services to companies called ISO's (Independent Sales Organizations). In doing so they reduced the cost of processing credit cards and realized their rates could not compete with the ISO's. (Secret #2) Most representatives sent to a merchant through their bank are not actually employed by the bank, rather an independent contractor representing the bank. Using a bank representative or your bank itself is typically the most expensive way to process credit cards, because you're paying the salaries and overhead of the financial institution. Now, while some merchants still buy their credit card processing services directly from a bank, more typically they get their services at a discounted rate through an ISO. The ISO cuts out the banks overhead and is responsible for selling the services directly to the merchant, providing technical support, processing the transaction ( authorizing it and directly submitting it to the Visa or Master Card network) and bears the risk of charge back(s), along with (Secret #3) setting the price of said services." (see Wikipedia.org)
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To find more merchant account secrets to saving money on your credit card processing, please visit: JR-N-Associates.com & Guaranteedwebsolutions.com
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