As a merchant there are many benefits in accepting credit cards and debit cards; however, your business will have to pay fees for virtually everything. For instance, you will pay fees for setup, application, processing, administration, and customer service.
Keep in mind there are many vendors, and no two vendors charge the same fees. One vendor may advertise low prices on setup, but they will charge more on processing. Another vendor may waive setup fees totally but they will charge for all service fees. Therefore, it is essential to choose the vendor that will best meet the needs of your specific business.
It is important to ask the right questions when choosing a vendor. You must know all of the fees associated with accepting credit and debit cards. First, the bulk of your fees will be transaction processing fees. Your fee rate per customer transaction will ultimately be based on your personal and business risk. The rate will be based on how many customers use credit or debit versus cash. The amount of the sale will weigh heavily when these rates are determined. Monthly sale rates of credit and debit cards will play a key role in determining this cost also. Getting the best rate will depend on you determining the rates and qualifications regarding each sale.
Vendors will usually quote you the qualified rate first. This is the rate that is based on a percentage of the sale whenever you accept a credit or debit card. You must use an approved processing solution to qualify for this rate. In fact, this is the lowest rate that you will be quoted.
A mid-qualified rate is when you accept and process a transaction that simply does not qualify for the lowest rate. One example is when you must manually key a transaction into the terminal instead of swiping the card, or if a customer uses a rewards or business card.
A non-qualified rate is the percentage you will pay when you accept a credit card that does not fit the criteria for either a qualified rate or a mid-qualified rate. Again, manually typing in the credit card information can trigger this rate, or address verification is not performed. In addition, if you don’t process the transaction within the 48 hours that is required, you may incur this rate.