Credit Processing Fees

When deciding on a merchant services provider, merchants often choose one based on who offers the lowest fees. In order to make the best decision about the fees, owners must know how the fees are assessed.

There are five types of credit card fees. The debit card rate is the lowest rate. This rate is the rate assessed on debit cards. Another name for the debit card is the ATM card. This is the card which is issued by the bank with a checking account and can be used at the ATM machine to deposit or withdraw funds from the checking account by using a PIN number. In order for the customer to use the card, he must use a four digit number assigned to him. The card has a VISA or Master Card logo and can be used as a credit card. When customer uses the debit card with a PIN number when making purchases, the charges are credited as debit card charges and the owner incurs a debit card fee.

If the customer uses the debit card without entering the PIN number into the credit card machine, then the merchant incurs a check card rate for processing the debit card. This rate is almost 60% higher. To avoid this charge, the merchant must purchase a PIN pad for processing debit cards. When the customer enters the PIN number, the card is charged as a debit card. PIN numbers are only used with debit cards.

The qualified rate is charged to an ordinary VISA or Master Card when the customer makes purchases. When the customer uses a VISA or MasterCard with rewards or frequent flyer miles, the merchant incurs a mid-qualified rate. This charge is higher than the qualified rate because the merchant must pay for the frequent flyer miles and rewards for the customer.

The highest rate which the credit card company charges is the non-qualified rate. When the merchant receives a credit card issued to a company or the military, the non-qualified rate applies. It is also assessed on a credit card charge which is taken over the telephone or through a mail order. During theses transactions, the merchant takes the credit card over the telephone or from a purchase order. The credit card is not present at the time of the transaction. The non-qualified rate is the highest rate because it is the most risky. There is a possibility that the company which owns the card may go out of business or the person handling the credit card for the merchant could steal the credit card number.

In conclusion, there are five different rates charged to the merchant for processing credit card fees. Although the merchants desire the lowest possible fees, this alone should not be criteria for choosing a merchant provider. This will be covered in a future discussion. If you like what you have read here today, I invite you to subscribe to the blog through the RSS feed on this page. This way, you will receive the up-dates as they are published.