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HOW ARE BASIS POINTS CALCULATED WITH A TOBACCO MERCHANT ACCOUNT?

A percentage of amounts are charged to the merchants for processing the credit card. The percentage varies according to the different type of card. Different credit cards have different logos on them. The master card, Visa, Visa Electron, etc are some of the examples of such logos of the credit card issuing companies. Basis Point refers to the percentage of amount or money which the bank provides to the merchant for processing the credit cards. The term Basis point is calculated in percentages so it is complicated. Certain discounts are given to the merchant account holders who process maximum credit cards daily. The merchant has to pay a certain amount to the bank for processing of the credit cards.

In every transaction where the credit card is processed, 0.01 % is imposed as a transaction amount. Some merchants incur a high rate whereas some might get a low rate. There are many formalities to be completed by the merchant before the bank while applying for a merchant account. Each merchant has to pass the eligibility criteria to get these services. The merchant has to decide and choose what type of business he carries on in the future. If a merchant qualifies and applies for higher basis points and at the same time if his business is slow then he is the sole sufferer.

The surcharge of the merchant which is required for the qualification has three important levels. The 1st level or the qualified rate gives 1.69 % to the merchant account holder or 169 in terms of basis points. In the same manner, there are mid-qualified and non–qualified levels also. The merchants holding such account are paid 0.3% and 1 % or 30 basis points and 100 basis points respectively. The discounts which are offered to the merchant account holders make a compromising difference while summarising the account. Rather than calculating the basis points in terms of percentages, it is easier to calculate on the basis points. For instance: 30 basis points = 0.3 % or 1 % = 100 basis points.

When the amount is calculated on weekly or monthly basis, these basis points show a decimal value. The basis points are not calculated on a daily basis but it is calculated at the end of a month. By looking at the transaction statements of a merchant, it can be clearly noted which merchant uses which qualification of basis points. A fixed amount of the basis point is charged to the merchant account holder for processing every credit card. The merchant who has qualified for the basis point is given the first preference then comes the mid–qualified followed by the non–qualified. The bank also provides an exchange to the merchant account holders which means, only if a merchant has processed a maximum number of credit cards within a certain period of time, then that merchant gets a high rate of surcharge from the bank. Sometimes, the percentage rises up to 33 % which is very beneficial for the merchant account holders. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.