If you have an online business today, you are well aware of the necessity to have a merchant service of some kind. Being able to accept credit cards online makes it convenient for customers and allows them to feel secure about their purchase with a credit card. For the merchant, it is vital that you are well aware of the merchant service provider rates. Otherwise, it can be easy to spend an arm and a leg on a merchant service.



The first part to understanding your merchant service provider's rates is knowing the classifications of each transaction. Each transaction will fall into the category of either qualified, midqualified or nonqualified. There are several ways the classification is determined, including the Visa/MasterCard regulations, the category of credit card used, whether the address verification system was used and whether the order was shipped within 24 hours.

If the transaction for whatever reason does not satisfy all conditions set by the Visa/MasterCard regulations, the transaction falls into the category of either midqualified or nonqualified. Another way the transaction can be classified as a nonqualified surcharge is by the category of credit card used. If you use a business card, business cards are considered high-risk, which puts the order into a nonqualified surcharge.

What this means is that your merchant service provider rate will be potentially 1.4% more in surcharges because of it being categorized as nonqualified. To avoid being docked any extra rate for transactions, you will want to talk with your merchant service provider to see the list of determinants that put a transaction into nonqualified.

The rates that you really want to watch for when going through a merchant service provider are the discount rate for each transaction and the per-transaction fee. The discount rate is the percentage applied to the dollar value of each transaction. The per-transaction fee, on the other hand, is a flat fee that is assessed after each transaction.

If you have a qualified transaction, the merchant service provider rates will generally be in your favor. However, the rates will fluctuate and could potentially not be the most cost-effective if the transaction is nonqualified or midqualified.

As you can see, having nonqualified or midqualified surcharges can cause high merchant service provider rates. By being aware of how to stay away from these classifications and assure yourself that you fall into the qualified surcharges, your rates will be much more feasible. All in all, it will make more a convenient way for your customers to make transactions using their credit cards while feeling safe at the same time.

Copyright (c) 2007 Jim Saka