6-Tier pricing began in April of 2003 after there was an 11th hour settlement with the card companies regarding accepting their debit cards. The problem was that the debit or other “PIN” card (needs a personal identification number) transactions were being charged the same fees as the charge cards. Walmart, along with thousands of other retailers opposed being forced to take Visa and MasterCard debit cards. Because of this settlement, card companies added a couple discount tiers for debit cards.
The consumer is offered more payment options now without prices being driven up from high fees that have to be paid. The pricing tiers include the following:
- Qualified rate is when all requirements are met
- Mid-qualified rate is when the card number is keyed in or when a rewards or business card is used
- Non-qualified rate is a mid-qualified transaction that doesn’t have address verification or the daily batch is not settled in the allotted time
- Debit card with PIN rate is when the PIN is entered
- Debit card without PIN rate is when for some lower amounts a PIN isn’t requested
- Online transaction rate is for transactions that occur online.
Rates are accumulative. For example: if the qualified rate is 1.5% and the mid-qualified rate is 1%, the rate for a mid-qualified transaction would be 2.5%.
Merchants can keep their costs and fees down by having as many transactions as possible at the lower rates. Some merchants encourage cash transactions with cash discounts. Even if they end up with the same amount of money, they won’t have to wait for the card company to settle to get their money.
Since the risk of fraud is higher when the card is not present, a payment processing company should have experience with online payment processing so that it is seamless and secure. The e-commerce site’s shopping cart should be easy to use.
The more choices for payment that a customer has, the more they will spend. Merchant Data Systems offers payment processing that includes card processing and check processing. Merchant Data Systems also has e-commerce payment processing experience.
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