Rates and fees applicable for merchant accounts

Whenever a retailer processes a credit card, for payments, money from the customer’s account is transferred to the retailer’s merchant account. Fees and rates are charged by the merchant account service provider for this service. Though the fee charged varies with each service provider, on the whole the fee is based on something called interchange. Interchange is the base rate dictated by Visa and Mastercard. Merchant account providers mark up their rates from the interchange rate.Other rates charged by merchant account service providers are qualified rate, mid-qualified rate and non-qualified rate. A qualified rate is the lowest rate that a merchant has to pay when accepting a credit card. This rate is charged when the merchant accepts a regular consumer credit card and processes it for according to the applicable norms for payment purposes. The mid-qualified rate is charged when a merchant accepts a credit card which does not fall into the qualified rate category. There are many reasons for this and one could be that the credit card information was keyed into a terminal rather than swiped or the credit card used is as a reward card or a business card. The mid-qualified rate is also refereed to as partially-qualified rate and is about 1 -1.5 higher than the qualified rate.The non-qualified rate is the highest rate paid by a merchant when accepting payments via credit cards. This rate is applicable in transactions where credit card information is keyed into a credit card terminal instead of being swiped and therefore address verification is performed. It is a rate applied for business cards and is also charged when a merchant does not settle their batch daily within the allotted time frame. The non-qualified rate I about 1-2.50 higher that a qualified rate.The different fees charged by service providers include transaction fees, authorization fees, statement fees, monthly minimum fees, batch fees and chargeback feesA transaction fees is charged each time a transaction is successfully processed by the merchant’s service provider. The merchant account provider will charge a statement fees, which has to be paid every month when a monthly statement showing the transactions processed by the merchant is sent to the merchant. The Statement Fee is a monthly fee associated with the monthly statement that is sent to merchant at the end of each monthly processing cycle. This statement shows how much processing was done by the merchant during the month and what fees were incurred as a result.Batch fees are charged for merchants who send their transactions in batched to their merchant account provider to payment.A merchant has to pay a chargeback fee when they encounter a chargeback. A chargeback when a merchant has to put back money into a cardholders account.Understanding the fees and rates applicable for a merchant account, will help to determine your payments towards this service

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