Lower Fees Through Qualifying - Part 2

So now you know there are many categories of credit card transactions; each one having a different rate based primarily on risk factor. Today I am going to cover how a rate is built and then give you a few examples.

Building a rate

Interchange is the price guide from Visa and MasterCard for merchant account transactions. Using interchange here is how we build a rate for retail account:

Visa CPS Retail (Card Present Base Rate)             1.54% + $.10
Visa Assessment (Every bank pays this to Visa)       0.0925%
Total Base Cost for a swiped Visa card                1.6325% + $.10

So now you know every merchant account provider’s base cost for a generic Visa credit card transaction in a retail environment. But let’s say this transaction is rewards card. Interchange says we must add .11% for such a transaction. So building a rate for a rewards card looks like this:

Visa CPS Retail (Card Present Base Rate)             1.54% + $.10
Visa Assessment (Every bank pays this to Visa)      0.0925%
Visa Rewards 1 surcharge                                  0.11%
Total Base Cost for a swiped Visa card                1.7425% + $.10

For each credit card transaction involving a credit card that is not just a normal consumer credit card there additional surcharges. Here are a few more examples:

Surcharge for a card not present transaction - .31%
Surcharge for a card not present Visa rewards card - .36%
Surcharge for MasterCard commercial face to face card - .46% + <$.10>

So where does qualifying transactions come into all this? How can qualifying lower your rates? That is what I will be dealing with tomorrow. Take heart though, now you know how to build a merchant account rate. How many people do you know can do that!?

Like this post? Then subscribe by RSS | Email