1. Visa has lower Interchange rates for consumer cards used at a supermarket:

2. MasterCard has lower Interchange Rates for consumer cards used at a supermarket:

3. Discover has lower Interchange Rates for consumer cards used at a supermarket:

4. Pin Based debit network fees are lower for supermarkets; here are a few examples:

5. If a merchant account for a supermarket is not set up with Interchange Plus pricing the merchant will not receive these special, supermarket rates. In other words if the merchant account has rate tiers such as “qualified”, “mid-qualified” and “non-qualified” then they are not receiving the benefit due them.

6. To received these lower supermarket Interchange rates the merchant account must be set up with very specific details when it is created. So make sure you are using a merchant account provider that has experience in this area.

7. The acceptable MCC Code required for these rates is 5411.

8. Some banks still require supermarket merchants to register with Visa and/or MasterCard as supermarkets. To do so questionnaires must be filled out with questions like, “how much of the floor space is used for perishable items?” And “How many register lanes do you have?” If you are asked to complete these registrations ask the person you are working with at the merchant account provider if you will pass the tests for certification. If you don’t you may waste a lot of time filling out forms and fielding questions from Visa and MasterCard.

9. If you do not want to go through the process of being certified keep searching for a different merchant account provider that does not require the registration; there should be plenty of them out there.

10. Supermarkets often have fairly sophisticated Point of Sale Software they are using. Make sure your POS Software is certified with the merchant account provider you are planning to use. I have seen many occasions where a supermarket chose POS software only to find out they would have to switch merchant account providers in order to use the new software.

BOTTOM LINE: If you are a supermarket know that you should be receiving lower rates than other retail merchants and find someone who knows how to set you up correctly to recieve these better rates.

If you have any questions about supermarket Interchange rates or anything else to do with merchant accounts feel free to contact me anytime.

Related Posts

• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• What is Straight Pass Through – Video
• What is Straight Pass Through?
• Merchant Accounts for the Rich and Famous
• Interchange Compliance – Guidelines
• Eight Ways to Save Money – Method #2
• Interchange Plus Explained

So lets say you process 200 transactions a month and you keep your account for 12 months, how would these two offers differ?

See what I mean? If you take my free authorize.net offer I make an extra $232.40! The problem is you pay an extra $232.40.

So maybe you are wondering where I am coming up with the free authorize.net numbers. I’ll tell you where from – www.freeauthnet.com. Their gateway and transaction fees are right on their website.

You also may be wondering if I am being serious about offering free authorize.net and I am; however my transaction fee will stay the same as it was originally which is $.05 after the first 250 transactions. Yes the gateway fee will be the same as freeauthnet.com but I am paying the setup fee out of my own pocket so I need to make sure I at least break even. On the other hand, if you want my original offer you are free to choose that as well.

Oh there is one other thing you will not receive if you sign up for my “free” authorize.net account, that is a merchant account with hidden fees inside the famous tiers of “mid-qualified” and “non-qualified.” In other words we will set you up with a straight pass through merchant account.

I wrote this to show you that when the word “free” shows up in any marketing, at least in the merchant account industry, that is code for “your overall cost will be much higher than if you just paid for what you were receiving”. This applies to free terminals, gateways and anything else that has a real cost to it. So beware of the word “free” and use your brain to figure out what the real cost are. If you’re lazy and just want the easiest path to take, contact me and I’ll get you your stuff for free and I’ll let you know what “free” is going to really cost you.

Related Posts

• Mid-Qual and Non-Qual Typically Means Hidden Fees
• Make Some Money and Feel Good Doing It!
• More on Free Authorize.net
• Authorize.net – Moving in the Right Direction?
• What is Straight Pass Through – Video
• What is a Merchant Account Downgrade?
• Introducing the iPhone Virtual Credit Card Terminal

Check back here in the next few days for more specifics on the coming changes to Interchange.

Related Posts

• Mid-Qual and Non-Qual Typically Means Hidden Fees
• Merchant Accounts for the Rich and Famous
• What is Straight Pass Through – Video
• What is Straight Pass Through?
• 10 Things Supermarkets Need to Know about Merchant Accounts
• Where do Processing Fees Come From? Pt. 1
• Merchant account confusion – “mid-qualified” and “non-qualified”

If you would like to lower your merchant account fees by switching to a “straight pass through” account go here, fill out the short form and we’ll have you saving money in no time.

If you would like us to analyze your current merchant account and show you how much a “straight pass through” merchant account can save you go here, and we’ll have the numbers back to you with in 24 hours.

Related Posts

• What is Straight Pass Through?
• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• Mid-Qual and Non-Qual Typically Means Hidden Fees
• 10 Things Supermarkets Need to Know about Merchant Accounts
• The Three Price Points of a Merchant Account
• Interchange Compliance – Guidelines
• What is a Merchant Account Downgrade?

Straight pass through has to do with merchant account risk. Visa and MasterCard have set specific rules to deal with these risks. For example, a keyed in transaction is a higher risk than a swiped transaction, because many times the card holder is not physically present. For keyed transactions, processed correctly, Visa and MasterCard have set an edict, a very specific surcharge of .31 percent for all Keyed or Card Not Present transactions. This surcharge is to be added to your base rate. This is TRUE BANK COST. If a merchant account processor charges more than the .31 for this kind of transaction they are not giving you “straight pass through.”

If this is happening to you don’t be too upset because padding Visa and MasterCard surcharge fees is the norm in the merchant account industry. They are basically buying something from Visa, and marking it up to increase their profit. When they are taking profit on one surcharge they are usually inflating them all the way down the line, rendering your attractive “font rate” as just a facade. In fact the lower your front rate is the higher your surcharges usually are.

In regards to merchant accounts straight pass through is receiving your surcharge fees at true bank cost. This my company’s niche in merchant account processing. Typically we are able to keep our new clients front rate the same and still give them up to 50% savings just by providing straight pass through to them.

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• Mid-Qual and Non-Qual Typically Means Hidden Fees
• What is Straight Pass Through – Video
• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• The Three Price Points of a Merchant Account
• Interchange Plus Explained
• 10 Things Supermarkets Need to Know about Merchant Accounts
• What is up with the CVV2 Code?

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• What is Straight Pass Through – Video
• Merchant account confusion – “mid-qualified” and “non-qualified”
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• Free Authorize.net? You Got It!
• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• Let’s Get Rid of Your EIRF!

I am writing this post for new or young businesses that have very little experience with merchant accounts. Let me start by letting you know where I get my knowledge on this subject.  Many of my new clients have been in business for three to four years.  When I first speak to them the first thing they do is send me their merchant account statement to review.  My knowledge comes from these statements that are normally filled with exorbitant and hidden fees.

Here are five things to watch out for when choosing a merchant account.

1. Watch out for credit card terminal leases – if you go this rout it will help your short term cash flow but the terminal will end up costing you 400% – 600% more than if you just purchased the terminal. For more information see this article.

2. Watch out for proprietary terminals and payment gateways – these are products that only work with a certain merchant account provider. The good names you want to see on your terminal are Hypercom, Verifone or Nurit and authorize.net or Skipjack for your payment gateways.

3. Watch out for bucket pricing – typically if you the phrases “qualified”, “mid-qualified” and “non-qualified” are on your statement, you are paying more than you need to for a merchant account. For information see this article.

4. Watch out for incredibly low rates – If you are promised a rate anywhere below 1.6325% + $.10, which is the base wholesale cost for a swiped Visa transaction, there is something going on that will not be a benefit to you. For more information on this subject go here.

5. Watch out for early termination penalties – just like in the cell phone industry, these penalties are very common in this industry. If you work hard you should be able to find a company that will provide a month to month agreement or one that only requires a thirty day cancellation notice.

If you think it is too early to get a merchant account here is a good post to read.

If you have been in business a while or are doing at least $10,000 a month go here and fill out the form and I will contact you shortly.

Related Posts

• Free Authorize.net? You Got It!
• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• What is Straight Pass Through – Video
• What is a Merchant Account Downgrade?
• Merchant account confusion – “mid-qualified” and “non-qualified”
• Is Your Merchant Account Set Up Correctly?
• Mid-Qual and Non-Qual Typically Means Hidden Fees

For Visa Transactions

Qualified = swiped, generic consumer credit cards.

Mid-Qualified = swiped rewards cards, keyed in generic consumer credit cards and sometimes keyed in rewards cards

Non-Qualified = EIRF, commercial cards, Signature Preferred cards

For MasterCard Transactions

Qualified = swiped, generic consumer credit cards (Merit III Base)

Mid-Qualified = swiped rewards cards (World cards), keyed in generic consumer credit cards (or Merit I) and sometimes keyed in rewards cards (World key entered)

Non-Qualified = primarily commercial cards; there are several other types

Debit Cards

If you have a tiered account most of the time you have different rates for debit cards. Generally speaking, if the debit card is swiped it will be titled “qualified debit” or just “debit.” If the debit card is keyed in it will show up as a “mid-qualified debit.” Finally, on a Visa debit card that is keyed in and has an address verification error your category will probably be “non-qualified debit.”

I hope this post helps those of you searching for these definitions. Please keep in mind these are very non-specific definitions. On a retail account Visa has 36 categories and MasterCard 47; so giving you exact definitions would be very difficult provide and hard to comprehend.

Bottom line

If your merchant account is set up this way you are paying more than you need to. My experience has shown me over and over again that tiered accounts have padded surcharges just about 100% of the time. Go here to request an analysis of your current account and I will provide you a detailed report that reveals how much a straight pass through account could save you each month. If you have any questions about this topic feel free to enter them into the comments of this post.

Related Posts

• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• What is Straight Pass Through – Video
• Mid-Qual and Non-Qual Typically Means Hidden Fees
• What is a Merchant Account Downgrade?
• What is Straight Pass Through?
• 10 Things Supermarkets Need to Know about Merchant Accounts
• Free Authorize.net? You Got It!

“Everyone is trying to come up with a better system. There isn’t one. It is just about rates…the only thing that gets the merchant’s attention is, ‘How cheap is the rate?’”

From my experience this president is expressing an industry wide view. The result is merchant account sales people low balling base discount rates and hammering merchants on their surcharges. Is anyone reading this paying 3.5% for “non-qualified” transactions? Then you know what I am talking about.

Here is a typical example:

A business goes shopping for a merchant account and their goal is to receive the lowest rate. This business does 20% of its transactions face to face and 80% by phone. When they call around they receive a quote of 1.59% and they go with that offer believing they received the best offer on the market place.

Here are the problems with this example:

1. The rate of 1.59% is great for a generic consumer card that is swiped in the store but on every other type of transaction the rates are hyper inflated. Since 80% of there transactions occur over the phone they pay 2.75% for all those transactions and there effective rate comes in at 2.95%! Not what they expected.

2. In order to provide such a low rate the merchant account provider set the account up as a retail account. The result is whenever a customer calls in to make a purchase with a Visa card and provides an incorrect zip code the rate jumps up to 3.20%. If the merchant account provider had focused on setting up the account in the most beneficial way for the merchant they would have set up the account MOTO and the zip code problem would not be an issue.

My point here is that when searching for a merchant account provider, price is not the only item you need to pay attention to. Other issues to consider are:

• Surcharges (on rewards, business, corporate, signature preferred, etc cards)
• Transaction Fees (price, attempt vs. capture)
• Account type (retail, MOTO, E-commerce, restaurant, hotel, auto rental, etc.)
• Account pricing model (gross or interchange plus)
• Transaction qualification
• Equipment prices
• Early termination penalties
• Customer service

Questions for You

Now for the questions – is your merchant account set up correctly? Are you really paying the lowest amount possible for your account? If you have any doubts, contact me and let’s do a review. You may be surprised by the results properly setting up a merchant account can provide.

Related Posts

• Free Authorize.net? You Got It!
• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• What is Straight Pass Through – Video
• What is a Merchant Account Downgrade?
• Five Things to Watch Out for when Choosing a Merchant Account
• Merchant account confusion – “mid-qualified” and “non-qualified”
• Mid-Qual and Non-Qual Typically Means Hidden Fees

Here is how these tiers work to increase the profit of the merchant account provider. Let’s say you have a retail business and your base rate is 1.90% + $.15 for all your card present swiped transactions. Your “mid-qual” rate is 2.75% +$.15. This category is typically for keyed in or card not present transactions and a swiped rewards card. Then you have a “non-qual” rate of 3.25% + $.15. This is for corporate or business cards and transactions that have problems . The chart below shows how lumping fees into these categories or tiers takes money out of your pocket.

Can you see that by having categories you would be paying from .54% to .89% more than you need to? That can add up over year. I just finished an analysis yesterday that will end up saving the company $15,593.82 a year! How? By getting rid of the categories.

For more information on straight pass through click here .

So what are the key lessons to be learned from this post?

1. If you have “mid-qual” or “non-qual” categories at least consider changing your merchant account provider by getting a few proposals from their competitors.

2. When shopping for a merchant account pay attention to the base rate but also pay attention to the surcharges that are added to the base rate for transactions like the ones listed above.

If you would like me to analyze your merchant account fill out this form or e-mail me ; I would be happy to review your current account and let you know how much money I can save you each month.

Related Posts

• Video: It’s Time to go Interchange Plus! (October Rates Changes)
• What is Straight Pass Through?
• Tip of the Iceberg – Missing Debit Card Rate Reduction
• Merchant Accounts for the Rich and Famous
• What is Straight Pass Through – Video
• How Do Merchant Accounts Work?
• What is a Merchant Account Downgrade?