Transaction Center & VPOS Support
The 3-Tier Pricing is the most popular pricing method and the simplest system for most merchants, although the new 6-Tier Pricing is gaining in popularity. In 3-Tier Pricing, the merchant account provider groups the transactions into 3 groups (tiers) and assigns a rate to each tier based on a criterion established for each tier.
A qualified rate is the percentage rate a merchant will be charged whenever they accept a regular consumer credit card and process it in a manner defined as "standard" by their merchant account provider using an approved credit card processing solution. This is usually the lowest rate a merchant will incur when accepting a credit card. The qualified rate is also the rate commonly quoted to a merchant when they inquire about pricing. The qualified rate is created based on the way a merchant will be accepting a majority of their credit cards. For example, for an internet merchant, the internet interchange categories will be defined as Non-Qualified, while for a physical retailer only transactions swiped through or read by their terminal in an ordinary manner will be defined as Qualified.
Also known as a partially qualified rate, the mid-qualified rate is the percentage rate a merchant will be charged whenever they accept a credit card that does not qualify for the lowest rate (the qualified rate). This may happen for several reasons such as:
- A consumer credit card is keyed into a credit card terminal instead of being swiped
- A special kind of credit card is used, such as a rewards card or a corporate card
A mid-qualified rate can be from 1.50%-2.50% higher than a qualified rate. Some of the transactions that are usually grouped into the Mid-Qualified Tier can cost the provider 0.30%-0.50% more in interchange costs, so the merchant account providers do make a markup on these rates. The use of "rewards cards" can be as high as 40% of transactions. So it is important that the financial impact of this fee be understood.
The non-qualified rate is usually the highest percentage rate a merchant will be charged whenever they accept a credit card. In most cases all transactions that are not qualified or mid-qualified will fall into this rate. This may happen for several reasons such as:
- A consumer credit card is keyed into a credit card terminal instead of being swiped, and address verification is not performed
- A special kind of credit card is used like a business card and all required fields are not entered
- A merchant does not settle their daily batch within the allotted time frame, usually past 48 hours from time of authorization
A non-qualified rate can be from 2.00%-2.50% higher than a qualified rate and can cost the provider 0.50%-1.50% more in interchange costs, so the merchant account providers do make a markup on these rates.