What Is A Qualified Rate?

If you’re looking for a merchant account, you see those kind of websites everywhere.  You know the kind I’m talking about:  The sites that are lit up like Vegas nights, screaming in bold letters, “LOW RATES!”

It can be tempting to choose a merchant account provider based on such fantastic claims.  However, there’s more to an internet merchant account than the big, flashy rate that a website claims to offer its customers.

First of all, there are a few different types of rates.  The rate they were probably quoted is what is called a “Qualified Rate.”  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 that is acceptable with their acquiring bank, such as swiping the card and verifying the address. This is the lowest rate a merchant will incur when accepting a credit card.

The next rate is called a mid-qualified rate.  This rate is what you will pay if you accept the card in a way that does not qualify for the lowest, or qualified rate.  This is what you would pay if you would key in the card information instead of swiping the card.  A mid-qualified rate is usually 1.00% - 1.50% higher than a qualified rate. Mid-qualified rates only apply to retail businesses.

A non-qualified rate is the final type of rate.  The non-qualified rate is the highest percentage rate a merchant will be charged whenever they accept a credit card. All transactions that are not qualified or mid-qualified will fall to this rate.  This rate would be used if a consumer credit card is keyed into a credit card terminal instead of being swiped and address verification is not performed, or the daily batch would not be completed in a timely fashion.

So, when choosing credit card processing services, don’t listen to the first rate you hear.  Many companies will try and entice you with a low rate, and then get you on a higher mid- or non-qualified rate.  It’s important to examine all the details before selecting your company.