Most credit card processing accounts are quoted to prospective merchant account clients by the lowest rate. This is called the qualified discount rate. However, many people are unaware that each transaction will not be processed at the quoted rate. Instead, there are three categories into that your transaction can fall. These are the qualified discount rate, the mid-qualified discount rate, and the non-qualified discount rate. These rates are determined by the amount of risk the wireless credit card terminals provider feels they’re accepting with any transaction. To figure out how to avoid getting the rate you pay “downgraded” (which means charged in a more expensive rate than the quoted qualified rate), you need to understand how these rates work, and what it takes to qualify for each category. First, you have to separate swiped and keyed transactions. A transaction is called ‘swiped’ when it is undergone a terminal or card reader, so the cardholder’s data is captured electronically from the magnetic stripe that is on the reverse side of the card.
Many stores, gasoline stations and restaurants use wireless credit card terminals.
Wireless credit card terminals processing companies trust swiped cards more than cards which are manually keyed in. It is because they feel that swiping eliminates the risk of human error in collecting the card data. The possibility of a disputed transaction or perhaps a chargeback is a lot reduced swiped transactions. Due to this, you’ll be charged a lower rate should you swipe cards, rather than having them entered. With a swiped transaction, you’ll spend the money for low qualified rate only when the following happen: a standard credit card is used in the transaction; the card is correctly swiped, with all of appropriate data being transmitted; and the transaction is settled within twenty-four hours. If you don’t qualify for the above rate, you may be downgraded to the mid-qualified rate (yet another control of 1.00% to at least one.50%). This occurs when the card information is manually keyed with all of AVS information entered, or perhaps a rewards card can be used. However, if any from the following happen, you’ll be downgraded to non-qualified (an additional control of 1.50% to two.00%): the credit card is manually entered or “keyed” without the billing address (AVS); the credit card type is government, international or business; the authorization code is manually keyed; or the transaction is not batched/settled within 24 hours. A transaction is “keyed” once the card details are manually entered using a terminal’s keypad, through point-of-sale software, on the phone, or via an online payment gateway (on the internet, from a website). Because most keyed transactions are processed without the credit card being presented to the merchant, there is more risk associated and better special discounts are charged.
If you are already processing but haven’t reviewed your current statement for the credit card merchant account recently, consider taking it to a competitor of your account provider. They will be able to analyze it and allow you to understand what rates you’re paying. You might be set for an unexpected. They should likewise be able to supply a competitive quote that may reduce your costs significantly.