Credit Card Processing Industry-Understanding the rates When It Comes to Merchant Services

Almost all businesses today are accepting credit cards payments. Businessman and consumers both enjoy the easy and secure payment transactions. But to the merchant, having a merchant account may turns up paying a few amounts of money to their financial institutions.

How much do businessmen pay for their merchant’s account? Businessmen usually pay based on several factors. It can be based on how much are the payment transactions and how much are the average sale. 

How can you rate the payment transactions? The payment transactions are given categories such as qualified, nonqualified, and midqualified and only based in the regulations of Visa and Master Card. It is the most expensive method when using merchant accounts. The midqualified and nonqualified payment are transactions that do not satisfy the rules of Visa and Master Card, and are given assessment as no transactions with surcharge. If you’re a businessman with a merchant account, be sure to read all the rules and regulations of your financial institutions before doing business to qualify for the criteria given by your company.

You must also understand when having a merchant account the terminologies of rates divided by ticket sales. There is no such thing as discount, as it happens when merchant service providers give discount to every customer during payment transaction. The name that is common to us all is the discount rate; it’s the term that is misapplied or the inappropriate designation of the term by the financial institutions. The reality is that discount rate is the name designated to the rate of the percentage of the dollar itself during every customer’s payment. It’s a flat free charge to every payment. If you’re trying to understand the rates divided by ticket sales of every payment, you must be aware of the factors and criteria to ensure you’re paying the exact rate.

Here is an example; the first merchant has an average sale of $100 with a discount rate of 1.65% and 30 cents payment per transactions. The second merchant has an average sale of $20 with a discount rate and payment per transaction fees same with the first merchant. The result is for the first merchant payment is up to $1.95 in every transaction of $100 payment from customers. The second merchant payment for every transaction is $3.15 in overall $100 sales. The difference of the amount during the payment is $1.20, in the same volume of sales and the same discount rate. If there is a large volume of payment, there is a decrease in discount rate unlike what is happening in having low amount of payment transactions. If you’re trying to understand the rates divided by ticket sales of every payment, you must be aware of the factors and criteria to ensure you’re paying the exact rate.