Accepting credit cards is one of the things that your business should do if you want to reach a bigger target market and get more profits. For you to accept credit cards as payment, you need to secure a merchant account. And yet, as a merchant, you have to begin understanding how much you will be paying for credit card processing solutions. Over the years, many developments have been introduced in the merchant service industry. In this day and age, you have several options when it comes to credit card processing solutions. It is crucial that you still take the time to understand the terms and costs of the credit card processing merchant that you choose.
Every credit card processor will have merchant processing fees and terms that describe these fees. The terms may differ between credit card processors. The words that each processor uses may not be the same, yet you have to understand that they are still costs. It is important for all credit card processing merchants to be aware of the usual terms and costs used by the credit card processing company that they choose.
If you say discount rate, you are referring to the fee that that your merchant bank will be charging you as the merchant. The merchant?s bank is what you refer as the acquiring bank. For the discount rate, it covers the interchange rate. The moment a merchant accepts credit cards, this rate is applied, where the acquiring bank will pay the issuing bank or the bank of the customer. When it comes to each transaction made via credit card, the interchange fee will be received by the purchaser?s bank from the bank of the seller. The bank of the purchaser will then pay the bank of the seller as well as the processor depending on the amount of the transaction amount. The acquiring bank then collects from the merchant any transaction fees and discount rates.
An interchange-plus pricing is another alternative rate that merchants can go for. However, this is the pricing that is only used by the more knowledgeable and well-aware merchants. A simple definition for this rate is a fixed markup that includes the actual processing charges. This pricing is similar to actual interchange costs along with a small fixed profit given to the processor. This pricing term is less confusing.
When you say qualified rate, this implies the lower possible rate that a credit card processing merchant will pay for each credit card transaction. Any swipe that happens from a regular consumer?s credit card will be charged through it. A signature from the consumer is collected and within 24 hours of such a transaction, it will be batched.