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. |