Learn the Truth about Merchant Rates when Processing Credit Cards

USBSwiper Home » Learn the Truth about Merchant Rates when Processing Credit Cards

Questions? Call (224) 677-0283

USBSwiper Means No More Tears From Tiered Rates

When it comes to base credit-card processing fees, old adages like “look before you leap” and “caveat emptor” (buyer beware) come to mind. That’s because things aren’t quite as straightforward as you may think when a seemingly super-low base percentage rate is being dangled before your eyes. An irresistibly attractive base rate of, say, 1.8% can suddenly become 3.5% – 4% if certain conditions aren’t met. And bingo! There goes another chunk of your bottom line.

The reason? Tiered rate structures that Merchant Credit Card Processors use apply increasingly higher percentage fees to mid-qualified and non-qualified transactions. And if you don’t look before you leap and buy with a wary eye you’ll find yourself in a situation like the one another old adage warns about: “marry in haste, repent in leisure.”

Or you can protect yourself up front from the tyranny of tiered rates, and keep more profit in your pocket, with the USBSwiper card payment processing system featuring PayPal as your credit merchant.

But to understand that, you need to understand how tiered rates work.

Up to 40% of Your Transactions Automatically Won’t Qualify for the Provider’s Lowest Rate

Did you know that even though you swipe every customer’s card and obtain every customer’s signature and batch every transaction within 24 hours, up to 40% of the fees you pay will still fall under the higher, mid or non-qualified rate? For the simple reason that up to 40% of your customers will be using rewards-type credit cards, and rewards-type credit cards automatically generate a mid-qualified or non-qualified transaction rate.

After all, someone has to pay for the sky miles, merchandise-redemption points, cash-back allowances, and other goodies that those cards provide. And that someone is you.

Qualified vs. Mid-Qualified vs. Non-Qualified Transactions

The following table lists conditions typically attached to three-tier pricing; specific conditions will vary by card provider. Take a look at how easy it can be to incur higher fees for mid- and non-qualified transactions. These are the kinds of “gotchas” you’re probably not going to hear about up front from a card merchant who’s trying to lock you into a contract with what seems like a fantastic base rate. Only later, when it’s too late to back out, will those significantly higher mid-qualified and non-qualified rates rear their ugly heads.

Tier 1: QUALIFIED TRANSACTION
Retail Merchant	Mail Order, Telephone Order, Internet
Regular credit/debit card (excludes rewards, business, international, and government types) Card successfully swiped through or otherwise read by the terminal in the normal manner Cardholder’s signature obtained at the time of sale Only one electronic authorization request Authorization amount matches deposit amount Standard retail industry coding for authorization and settlement Transaction batch-transmitted within one day of authorization date	Only one electronic authorization request, including cardholder’s street address and ZIP code verification Transaction date matches shipping date Transaction/shipping date no more than 7 days after authorization date Settled amount matches authorized amount Settled transaction includes merchant’s customer-service telephone number, order number, and total authorized amount Settled transaction includes sales tax and unique coding for commercial (business) cardholder Authorization response data included in settled transaction Transaction batch-transmitted within one day of authorization date
Tier 2: MID-QUALIFIED TRANSACTION
Rewards-type card Business, corporate, international, government card Card data keyed (not swiped) into terminal Other qualified condition(s) not met	Rewards-type card
Tier 3: NON-QUALIFIED TRANSACTION
One or more qualified conditions not met Extra-generous rewards type card Card data keyed (not swiped) into terminal Transaction batch-transmitted more than one day after authorization date Business/corporate card transaction does not include all required additional information	One or more qualified conditions not met Extra-generous rewards-type card Transaction not electronically authorized Authorization response date not included in settled transaction Transaction batch-transmitted more than one day after authorization date Business/corporate card transaction does not include all required additional information American Express and Discover Cards

No Pain, Much Gain With USBSwiper

With the USBSwiper credit card reader and payment processing software, there’s no such thing as a mid-qualified or non-qualified transaction. One flat rate based solely on monthly volumes will help keep your costs lower and more predictable. Remember: a merchant account provider will quote you the lowest transaction rate to get your business; however, it’s a good bet that at least half your monthly card transactions will not qualify for that attractive rate, but will generate much higher fees.

The graph illustrates the potential impact on your annual costs, based on $50,000 in monthly credit-card transactions.