What Are the Main Types of Merchant Credit Card Services?

merchant credit card services

The two main types of merchant credit card services are Interchange plus and Tiered pricing. In order to understand these two types of pricing, you must also understand the merchant account fee terms.

Merchant Account With Tiered Pricing

Most small business credit card processing accounts operate on a tiered structure. These accounts usually have 3 tiers at a minimum. Some credit card services offer have 6 tiers or even 12. The three basic tiers are:

  • Qualified credit rate is the base rate
  • Mid-Qualified credit is a surcharge added to the Qualified rate on some accounts
  • Non-Qualified credit is a higher surcharge added to the Qualified rate on some accounts

A 6 Tier merchant account rate structure will include the three categories above plus the three below:

  • Qualified debit rate
  • Mid-Qualified debit rate
  • Non-Qualified debit rate

Numerous factors determine when the mid-qualified and non-qualified surcharges are applied to customer transactions that are deemed other than "standard" by the merchant account provider. The Qualified rate is the lowest rate that you will incur when accepting a customer's credit card.

Some factors, which may cause you to incur surcharges, are:

  • A customer's credit card account is keyed in instead of being swiped.
  • A business or rewards card is used.
  • A MOTO (mail order/telephone) customer Online customer
  • Daily batches not settled within allotted time

It is easy to see how Tiered pricing can become very confusing. If all you had to do each day is review and analyze your merchant account statements, it probably would not be a big deal. We know this is not the case. As with most business people you don't have the time to analyze every fee and charge on your statement. You really may not know or be sure that you are paying too much for the service.

Interchange Plus Pricing

Interchange Plus pricing is the merchant account pricing structure where a fixed markup is applied directly to the interchange fees. These interchange fees are published by Discover, Mastercard and Visa.

The "plus" in Interchange Plus pricing refers to the amount added to the credit card processing rate (the Interchange). One way to look at Interchange Plus Pricing is that if you think of Tiered Pricing as retail price for your merchant credit card services then Interchange Plus would be the wholesale version of the same product.

Interchange Plus Pricing is discussed in greater detail on the following page.

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Get A Merchant Cash Advance

If your business is generating sufficient credit card sales, $6,000 or more per month, you may be able to use those future sales to get working capital with a merchant cash advance.

Apply for a merchant cash advance here with this secure application form.

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