PROCESSING RATES FOR CREDIT CARDS

If you are new to this industry, the first thing that you will notice is, there is cut throat competition among the participants in the merchant services industry. While choosing the service provider, people usually go for the one who offers good quality processing at the lowest processing rates. But, things are not as simple as this, since the merchant should understand these rates and how they will be charged.

Fundamentally, there are 6 kinds of card rates that you will be charged depending on the kind that you use. The debit card transactions which are pin based is the least possible rate that the merchant has to pay. It is only based on ATM or debit cards which is linked to any checking account and is mostly used for ATM transactions. You need to enter a 4 – digit PIN or personal identification number to complete the transactions. The card having MasterCard or Visa logo can also be utilised for shopping and paying other bills. The merchant will be charged under the Pin – based debit card transactions, which attracts the lowest rates in the industry. Therefore, the user gets charged for the pin – based debit card transaction fee.

Then we have the check card rate which is about 60% higher than debit transaction rate and this rate applies when a customer uses his or her debit card like a credit card. In most cases the merchant will pass on such charges to the customer. But, this can be avoided. The merchant will make the customer to type in his personal identification number on the PIN pad. When the pin is keyed in, the card will be considered as a debit card since pins only come with debit cards.

Being just a little higher than the debit transaction rate is some thing called as the qualified rate which has to be paid by the merchant when any customer uses any of the typical MasterCard or Visa cards. If the card gets utilised with frequent flyer miles or rewards, the merchant has to pay for the points that is earned by his customer by paying a mid – qualified rate, and this rate is much higher when compared to the qualified rate.

The highest rate that a merchant has to pay is the non – qualified rate. The merchant will be charged with this rate when his or her customer uses a MasterCard or Visa card that is issued to the government or to a business. This rate is also applicable to telephone credit card payments. Fundamentally, this rate is the highest only because the conditions which apply for this is highly risky. Credit card payments made over the telephone are also very risky, since the card isn’t present when the transaction is done. Due to the high risk involved, the rates are also very high. There is a good possibility of the merchant going bankrupt.

The mail order rate is applied for merchants who accept payments through mail or over the telephone.