CREDIT CARD PROCESSING RATES

Those who are not familiar with the merchant account services industry will find that there exists high competition level among the participants. While selecting a merchant account provider, one generally selects the provider who offers the least rates for processing credit cards. But, selecting a provider is not very simple as you need to understand all the rates and fees associated with credit card processing. These rates play a vital role in the handling of merchant accounts.

There are 6 basic kinds of credit processing rates that depend on the kind used by the consumer. PIN-based debit-transaction rates are the lowest that are incurred by a trader. This rate is based on the ATM cards or debit, linked with checking accounts, and may be used for ATM transactions with the help of the 4 digit PIN. Cards bearing the Master Card or Visa logo may also be utilised with the rates recorded as Personal Identification Number based debit charges. Therefore, users are charged for PIN-based debit-transaction fees.

The next rate is the check card rate which is about 60% more than debit transaction rates. Check card rates are charged to consumers who utilise their debit cards in the form of credit cards. Merchants can avoid the check card rate by making the consumers enter their PIN on the PIN pad. After the PIN has been entered, the card gets registered as a debit-card. PINs are applicable only for debit cards.

The next credit card processing rate that a merchant has to pay is the qualified rate. This rate is paid by a trader when a Master Card or Visa is used by a consumer. If this card is utilised for rewards, then the trader will end up shelling out for the privileges earned by a consumer via the mid-qualified rate. The mid-qualified rate is higher when compared to the qualified rate.

Non-qualified rates are the highest rates that are charged on a merchant the non-qualified rates are incurred by a merchant when a consumer uses the Master card or Visa that has been issued to the government or a business. The non-qualified rate is also applicable to payments made by credit cards via the telephone. Simply put, the non-qualified rate is the highest as the conditions associated with it pose high risks. When payments are made over the phone, this rate will be charged. Such transactions take place in the card-not-present environment. Hence, the payments made in such environments are considered to be very risky. There are chances of the merchant account owner going bankrupt.

Transactions that take place over the telephone on a regular basis or through mails will qualify for a rate known as “mail order rate”. In comparison with the non-qualified rate, the mail order rate costs lesser. Hence, it saves the merchant from being charged with non-qualified rates when Master Card or Visa is being used for making payments. Hence, it is very important for a trader to take into consideration all the credit card processing rates well before acquiring a merchant account.