|
COST OF EACH TRANSACTION MADE THROUGH
CREDIT CARD
There are 2 components of a debit or
credit card transaction.
Every time a merchant has to process a
debit card or a credit card, he is
charged with an “inquiry fee” and some
percent of the value the transaction.
The “inquiry fee” will cost the merchant
anywhere from twenty cents to thirty
five cents. The other one, percentage
charge, depends on the “credit card
rate” which is based on the type of
credit card you hold and also the
transaction type.
Categories of Credit Card Rates:
The Rates of Credit Cards are split into
2 categories:
Card – Present transactions attract the
lowest credit card rates in the
industry. These transactions are done
using the credit card and the swipe
terminal where the credit card has to be
swiped in the terminal and then the
receipt has to be signed by the owner.
Card – Not – Present transactions also
called MOTO are transactions where the
card isn’t swiped in a terminal. These
are mostly phone transactions or
internet transactions or transactions
where your credit card number is keyed
into the terminal. These type of
transactions attract a higher rate.
Types of Credit Card Rates
The rate for any type of credit card
transaction is decided based on the type
of the card, the processing method and
the amount of time it costs the merchant
for the processing of the transaction.
Since, there is high variation in credit
card rates depending on its type you
have to decide whether you need a card
not present or card present before
applying for the card, because the
charges on card not present in much
higher in Type 1 plan and is lower in
Type 4 plan.
Retail or Type 1 Plan – This plan is
mostly designed for the card present
transactions.
Type 1 Qualified – here the credit card
is swiped in the terminal and is batched
for processing by the merchant within a
day. Most of the credit cards come under
this category. This plan has the lowest
rates.
Types 1 Mid – Qual – These only refers
to cards issued for giving rewards and
are mostly key – entered transactions.
These transactions are batched between
24 and 48 hours.
Type 1 Non – Qualified – All government
and corporate cards attract this rate
without regard to the time needed for
batch processing. All transactions which
are batched by the merchant after 2 days
also attract this rate. This type has
the highest rates in the industry.
MOTO or Type 4 – This kind of account is
applicable for transactions without the
card.
Type 4 Qualified – Most of the
transactions come under this category if
the merchant batches the transactions
within a day. These attract the lowest
rates in this type.
Type 4 Non – Qualified – All reward,
government and corporate cards attract
this kind of rates without regard to the
processing time required. Also, all the
transactions batched in the next day
also attract this rate.
Classification of debit cards is done in
the same way as that for the credit
cards but with lower rates.
|
