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Have you ever noticed?
Have you ever noticed how many types of credit cards are offered out there? Credit cards to help you build or rebuild your credit history, credit cards for students, credit cards with rewards, credit cards with 0 interest. As a merchant who accepts credit cards, what does this mean to you? Well, it depends on your processor and their method of billing for these transactions.
Most processors offer one of three types of billings for credit card processing: 1.ERR 2. Large Corporate Pricing (Interchange) 3.Tier Pricing. As if understanding all the ins & outs of credit card processing wasn’t difficult to navigate through already, some processors make it even more difficult by throwing ERR & tier pricing at you. With ERR and tier pricing you are charged based on the type of card your customer is using. You get charged a:
1. qualified rate for a “regular” card
2. non-qualified rate for those business cards or keyed in transactions
3. mid-qualified rate for rewards cards or keyed in transactions
As if that wasn’t enough, you can get charged a non-qualified or mid-qualified rate if you don’t settle your batch within a certain allotted time frame, usually 48 hours after authorization is received. Now…most transactions will fall within the non & mid-qualified types of transactions and it just so happens that these types of transactions yield the highest rate charges to the merchant. You should note that if you average $100+ transactions, it’s probably a good bet that you’ll be charged a non or mid qualifed rate because most customers will want to earn points or miles for these high ticket transactions. There is no way of the merchant controlling the type of card they are accepting, that’s really up to the customer, so why should the merchant be charged a higher rate for these transactions?
That’s why Large Corporate Pricing is the easiest to work with. The merchant gets billed a flat rate regardless of the types of cards their customers use. It makes it easier for a merchant to understand their billing because their cost of processing is based on the volume of processing times the agreed upon rate during sign up. Most processors also charge a batch fee, settlement fee, statement fee, etc. These fees are negotiable, but it’s the method in which you are being charged for the cards you accept that you want to look out for. Make it easier on yourself and go with a company that provides Large Corporate Pricing. Why penalize yourself for something you have no control over?