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WHAT DOES BASIS POINT DO WITH OFFSHORE MERCHANT ACCOUNTS?

Every merchant is paid a percentage of amounts for processing of the credit. The percentage may vary according to the card type. There are different types of credit cards which have different logos on them. For example: master card, Visa, Visa Electron, etc. Basis Point refers to that percentage of money that the bank gives to the merchant on every processing of credit card. The term Basis point is complicated as it comes in percentages.

Discounts are also given to the merchant who processes more credit cards on a daily basis. The merchant needs to pay the bank for processing the credit card. However, the charges are very low. For each transaction and the credit card processed, a sum of 0.01 % is imposed on the transaction amount. The merchants are sorted according to their business type. Some merchants get a high rate whereas some might get a low rate. There are many formalities to be fulfilled by the merchant with the bank. Each merchant has to qualify the criteria to avail these services but charges are applied. It is upon the merchant to choose what type of business he does. For instance, if a merchant qualifies and applies for higher basis points and if his business is slow then he is the sufferer and not the bank.

A merchant’s surcharge needed for the qualification has three levels. The 1st level or the qualified rate gives 1.69 % to the merchant or 169 basis points. Similarly, there are mid - qualified and non – qualified levels too. The merchants holding such account are paid 0.3% and 1 % respectively or 30 basis points and 100 basis points. The discounts that are given to the merchants make a great difference when it comes to summarising of his/her account. Instead of calculating the basis points in terms of percentages, it is much easier to calculate on the basis points itself. For example: 30 basis points = 0.3 % or 1 % = 100 basis points.

While totalling up the amount per week or monthly basis, these basis points shows a decimal or fractional amount. These basis points are not calculated daily but it is calculated in bulk at the end of a month or at the end of every financial period. It can be clearly noted which merchant uses which qualification of basis points from the statements of his transactions. A fixed amount of the basis point is charged to the merchant for processing each credit card. However big the transaction may be but the amount of the basis point is the same.

The merchant who is qualified for the basis point is given the higher priority then comes the mid – qualified followed by the non – qualified. Sometimes the bank provides an exchange to the merchant account holders which mean if a merchant has processed maximum number of credit in a certain period of time, then that merchant gets a high rate of surcharge from the bank according to the work that is carried on. The percentage may rise up to 33 % which is quite beneficial to 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.