When a customer pays thru a regular customer credit card, it will be processed as “standard” by the merchant account provider. The applicable rate to be charged is called a qualified rate, the lowest rate a merchant will gain in accepting a credit card. This applies to both internet transactions and physical retail swiped through in an ordinary manner and used a regular customer credit card.
But what if a credit card is keyed into the terminal instead of being swiped? Or the customer used a rewards card or business card? What is the rate to be charged to you when you transact these payments?
When these happen, mid-qualified rate is the applicable rate for the transactions. This rate is also known as partially qualified rate. Merchant account providers gain a lot of profit from the transactions made under this rate. It is usually 1.50% - 2.50% higher than a qualified rate and only cost 0.30% - 0.50% more in interchange cost. Since reward cards are so common nowadays, it is probable that there is 15 – 40% transactions made everyday falls under the mid-qualified rate.
The most wounding charged rate by the merchant account provider is the non-qualified rate. Transactions that did not fall as qualified and mid-qualified will be considered a non-qualified rate. It is the highest percentage rate with 2.00% - 2.50% qualified rate and costs only 0.50% - 1.50% higher in interchange costs. This rate is applied for special kind of credit card such as business card when all required fields are not entered. Or when the customer’s card is keyed into a credit card terminal than swiped and address verification is not performed.
In case of unsettled daily batch within the allotted time frame, transaction made thereafter are also charged with a non-qualified rate.