Understanding the Key Roles of Merchants for Credit Card Processing
Understanding the costs on a credit processing solution is very important to understand on the side of the merchant who processes credit card. Therefore, in order to stay competitive in the card industry, merchant services have also evolved when it comes to their systems and language. Unfortunately, despite the development, being unaware of the cost of the credit card processing will still affect these merchants.
Most processors have merchant fees associated to the processing per se as well as the description of each of the fees involved. There is still variation to the meaning of the terms depending on your processor. Most of the processors prefer to use the convincing terms for their costs but still, the meaning of that for the credit card processing merchant is still a cost. Therefore, it is a must for credit card processing merchants to be aware of the costs and the terms used to describe the costs especially when they’re dealing with to credit card processing companies.
One of the popular fees that an acquiring bank or the merchant’s bank charged to a merchant is the discount rate. Interchange rate is included in the discount rate whereby the “Acquiring bank” is obliged to pay the customer’s bank or also called the “issuing bank” when a merchant accepts the card. The transaction therefore describes the payment of the merchant’s bank to the customer’s bank, also termed as interchange rate. After that, the cardholder’s bank will now pay the merchant’s bank and the processor that should tally the price of the transaction After that, the acquiring bank will now collect all the transaction fees and discount rate from the merchant.
On the other hand, an interchange-plus pricing is the uncommon rate that is also offered to a merchant. There are still merchants who are already aware of this fee therefore helping them decide to choose this fee. The computation of this rate is just adding the markup price to the actual processing charge. This will equate to the total actual cost of the interchange or the cost of processing that will be added to the small fixed profit for processor. This pricing is more convenient and understandable.
Another rate is the qualified rate that is considered to be the lowest rate paid for a typical credit card transaction by the credit card processing merchant. This is charged to a regular customer card transaction (cards that don’t have rewards, etc.) that is swiped on-site wherein the signature is collected and will be batched within 24hours after the transaction. The qualified rate is the percentage that is charged to a credit card processing merchant for a transaction that is termed as standard. Still, a “standard” transaction will still vary that is dependent to a processor,