Discount Merchant Account Rates

Savvy business owners know how to shop around for the best discount merchant rates and save money for their company. Savvy business owns know that processing debit cards is much cheaper than processing credit cards. Merchant need to know that there are different rates for processing different types of cards and how the transaction is being processing can save you money.

I will attempt to explain the different tier pricing and interchange rates when it comes to qualified and non qualified transactions.

Card Present Retail Environment: This is designed for restaurants and retailers with a physical store where customers come and swipe their credit card through a credit card machine/terminal. Every card that is swipe through the terminal is considered a qualified transaction. Typically, this is the lowest rate and this is the discount rate you pay, say 1.59% if that is what you got. A Mid-Qualified transaction is when a customer swipe rewards cards such as frequent flyer/airline miles credit card, cash back cards, and other types of rewards cards. You will pay a slightly higher rate because the credit card companies are passing the fees to businesses for accepting these types of cards. Non-Qualified transaction is when you accept business/corporate cards and government cards. The rates are higher than Mid-Qualified downgrade. Additionally, if the merchant key in the credit card number manually on the terminal, this is considered a Non-Qualified transaction as well regardless of the type of card being used to pay for the product or services. In a retail setting, the only time a business will manually key in a transaction is if they are experiencing problems with the magnetic reader on the customer’s credit card; or if the retailer is accepting payments over the phone by keying in the transaction with the terminal. This is considered card not present, this is referred to as Mail Order/Telephone Order (MOTO) utilized by phone based businesses. In short, every time the customer is not actually present to swipe their card is considered a Non-Qualified transaction (card not present) and all internet and MOTO falls into this category.

For retail and restaurant who want to further understand the card type rates, you just need to keep in mind that the card transaction type is determined how fast the transaction will batch out and settle. That is why debit transaction offer the lowest fees, especially Pin-based debit transaction as you are dealing with cash in the bank and not credit which can take a bit longer for the transaction to actually settle. A debit transaction is instant.

If you want to save the most money, you should always ask your merchant services provider for “Pass Through rate”. A Pass Through rate is the lowest rate you can get because you are typically paying the wholesale rates from Visa and MasterCard with a slight markup. We offer all of our merchants Pass Through. In a retail environment, if you are accepting many different types of credit cards, this is the ideal solution for you to save money on fees as the fees are capped lower than regular interchange or tiered rates when you use Pass Through. So you don’t have to worry about rewards cards and corporate cards hiking up the discount rate on a downgrade. So the best case scenario for a retailer or restaurant is to get Pass Through and use Pin-based debit transactions because there are no discount rates if you use a PIN Pad when processing a debit card.