Did you get a GREAT deal on your credit card processing rates and receive a statement from your merchant processor with surprise added extra fees?
Unfortunately, you are not alone.
It's common in the credit card processing industry for merchants to be lured into attractive credit card processing rate deals, only to find out later they have been misled. Reading the fine print could have prevented it, but really ... who reads the fine print?
Three terms in the merchant processing industry that you should make yourself familiar with as a business owner are: Qualified, Non-Qualified, and Mid-Qualified.
These are common in tiered credit card processing rates and are very easily manipulated by merchant processors to the disadvantage of the merchant.
Let's take a close look at each.
Qualified Credit Card Processing Rate
The qualified rate in tiered pricing structure merchant accounts is the lowest rate a business will pay. Obviously, this is the rate that is advertised by the processor because it is lowest, yet depending on your business type a low number of your transactions could actually be categorized into this fee bucket.
Here are a couple of additional things that they don't tell you:
- Typically, only non-reward consumer credit cards and debit are included in this rate bucket. You know all the TV commercials advertising "reward" cards and "cash back" on purchases? If a consumer uses one of these cards during the purchase, you will not get the "qualified" rate on your fees.
- Worse yet, some processors use bait and switch tactics where they advertise the Qualified rate lower than Mastercard and Visa's lowest credit card interchange rate. When this happens, they only route debit card transactions to this bucket. That means credit card transaction (non-reward or not) go to the higher rate Mid-Qualified and Non-Qualified automatically, regardless of the type of credit card used in the transaction.
Non-Qualified Credit Card Processing Rate
This is the most expensive rate bucket and can be the most common, hence the surprise added cost to your credit card processing fees. Typically, all transactions using high-end rewards program cards are routed here.
What else they don't tell you:
- Business card purchases are typically routed here. Are you a business-to-business company? If so, there's a good chance that most of your credit card transactions are being routed to the highest fee bucket, the non-qualified rate!
- Do you hand key in transactions through a virtual terminal? If you do, and if the complete billing information isn't entered, your processor likely pushes that transaction to the non-qualified rate bucket and you are paying a higher fee.
Mid-Qualified Credit Card Processing Rate
This is the most nebulous credit card processing tier (or fee bucket). Typically any consumer credit card with a basic rewards program will find its way to the Mid-Qualified bucket.
What else they don't tell you:
- Do you swipe credit cards in your retail location? Typically, swiped reward credit cards, as well as consumer transactions that are manually keyed-in (both credit and debit) hit the mid-qualified rate bucket.
- Additionally, the merchant processor can change what makes a transaction qualified without notice. That means a transaction that was qualified when you signed the contract for your credit card processing, may not be qualified 6-months down the road.
The Novera Approach
Novera Payment Solutions has developed a unique flat fee credit card pricing format that passes along all the direct transactional costs:
- Interchange
- The processor costs
- A small “flat fixed fee” per month depending on the monthly merchant volume (usually between $19.95 and $99.95 per month). This amount is essentially the gross margin on the account.
Since everyone knows we are in business to make a profit, we are not hesitant to let our merchant clients know what a reasonable profit margin will be instead of hiding it within inflated rate buckets.
In most cases, Novera Payment Solutions also offers the option of either “Next Day” or “Weekend Funding,” and always with “Gross Deposits.” Unlike many processors who deduct their rates/fees daily from your deposits, fees for our services are not collected until the month after the month you have been processing. This means you get your money faster and it’s easier to reconcile with your bank statements.
Are you ready to stop paying too much for your credit card processing?
Request a free quote from Novera Payment Solutions. The question is not, can we save you money" ... rather how MUCH money can we save your business!
