Terms To Know
Following are some useful definitions that pertain to pricing merchant transactions:
Basis Point: 1/100 of a percentage point. The term is used to describe discount rates, which are the bulk of card processing fees paid by merchants.
Discount Rate: includes fees, dues, assessments, markups and network charges merchants must pay for accepting credit and debit cards. Interchange is the discount rate's largest component.
Interchange: the fee paid to the card issuing bank by the card acquiring bank by way of the card brands. Interchange rates vary widely based on card type, transaction amount, risks and retail sector. Interchange is assessed on all Visa Inc.- and MasterCard Worldwide-branded credit and debit cards.
Mid-Qualified: the percentage rate merchants are charged when accepting credit cards that do not meet qualified rate requirements. Also known as a partially qualified, the mid-qualified rate applies in such cases as when cards are keyed into terminals instead of swiped or if the cards are of a special type such as rewards cards.
Non-Qualified: often the highest percentage rate merchants are charged for accepting credit cards. In most cases, transactions that are neither qualified nor mid-qualified fall into this category. The bulk of these transactions are done with corporate cards.
Qualified: the percentage rate merchants are charged when they accept regular consumer credit cards and process them with an approved processing solution in a manner defined as standard by their merchant account providers. Qualified is typically the lowest rate merchants incur when accepting credit cards.
Read more about this topic: Merchant Account
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