UNDERSTANDING YOUR RATES AND FEES

When a merchant processes a card, they are charged a fee called interchange. Interchange is the base rate dictated by Visa and MasterCard. Interchange is made up of varying tiers. These tiers describe costs for different kinds of credit cards when processed under different circumstances. The method of how a credit card is processed changes which tier of Interchange is applied. For example, a swiped credit card costs less to process than one keyed into a credit card terminal.

Each of a merchant's credit card transactions will be classified as qualified, mid-qualified or non-qualified. Transactions that do not satisfy all of the required qualified transaction conditions, as established by Visa and MasterCard, are assessed either a mid-qualified or a non-qualified surcharge. The type of credit card used in a transaction is one factor that establishes how a transaction is classified. For example, corporate cards are often considered high-risk. Therefore, a transaction done with a corporate card may cost a merchant a higher surcharge.

Other aspects that determine whether a transaction is classified as qualified, mid-qualified, or non-qualified are whether the address verification system (AVS) is used and whether the transaction is settled or batched on time. To ensure that a merchant is getting the best possible rate on transactions, they need to settle each night after transactions have been processed, enter the correct AVS information when asked, process through the correct account type, and use PIN-based debit when applicable. This will help to get the lowest rates possible on each transaction.

Qualified discount rate

This is the percentage that will be charged on all of a merchant's credit card sales. Swiped credit cards have a lower discount rate because the cardholder is present and the risk is lower. Most swiped transactions go through at a qualified rate unless they are a corporate or foreign card, or do not meet another regulation for qualified status.

Mid-qualified surcharge

This applies to merchants who swipe credit cards but do not meet the requirements for a qualified level. For example, when a credit card is swiped and the magnetic strip cannot be read in the terminal, or when there is a telephone, mail, or internet order, a merchant will key in the transaction. A surcharge will be applied to the transaction because it does not meet the requirements of a qualified rate. Also, keyed credit cards will have a higher discount rate due to the fact that there is more risk involved in accepting the credit card because the cardholder is not present with a phone, mail, or internet order. It could also indicate fraud if the magnetic strip is not functioning.

Non-qualified surcharge

This applies to both swiped and keyed merchants. Whenever a corporate or foreign card is used, or the AVS system is not utilized when keying in a credit card, the non-qualified surcharge will apply.

Transaction Fee

This is a flat fee, and is charged each time a merchant runs a transaction. This is in addition to the discount rate surcharge.

Batch Header Fee

At the end of each day, a merchant will either manually close out for deposit (settle/batch), or the merchant account will automatically be set up to close out for deposit. Once this is done, the funds will travel through the ACH system electronically to deposit the funds into the merchant's checking account. The batch header fee is applied for each batch closed out for deposit. Some merchants try to "save money" by not batching every night to avoid this fee. This is not a smart plan of action, because if a terminal is not batched within 24 hours of the transaction processing, you will be charged a higher rate on swiped transactions (mid-qualified). In order to receive the best rate, batch every day.

Wireless Access Fee

This fee is assessed for merchants utilizing a wireless terminal. Wireless access will allow a merchant to process transactions through the wireless network, rather than processing transactions through a telephone landline. Once a transaction is completed through the wireless terminal, it travels through the wireless network for processing.

Gateway Access Fee

This fee is assessed for merchants utilizing Internet processing or a virtual terminal. Once a transaction is completed by the customer on a merchant's website, or through the virtual terminal, it travels through the Internet gateway for processing.

If you have any questions about these fees, please contact our 24-hour customer service line at 800-789-8897.