Thursday, September 18, 2008
Hi, and welcome back today I am going to explain how processing fees are charged.....they are all based on risk, not risk to you as the merchant, but how much risk to the processor.
Debit Cards (capture pin # in pin pad) - 0% with a transaction fee
Qualified Rate (swiped) rate range from 1.69% - 1.89%
Mid-Qualified Rate (personal card hand-keyed in with correct AVS) 2.39% - 3.50%
Non-Qualified Rate (Corporate Cards Swipe or keyed in it doesn't matter, or personal cards without AVS) 3.50% - 4.50%
AVS = Address Verification ( the numerical portion of the billing address, zip code, and CVV2 # (last 3 digits on the back of the card)
For example a debit card that you capture the pin number on is the lowest risk card because if you loose your debit card you don't normally have your pin number on it. The second least risk credit card is a swiped transaction because the customer is in person when they purchase the item from the merchant, the transaction that carries the most risk and therefore the biggest charge is the hand key and Corporate cards. Now this is the area that a large number of processor will not talk about or even train you(the merchant) on because it is a highest profit area for the processor.
Let's start with the personal credit card, a customer calls and ask you to ship an item to them so, you take their credit card number, billing address of the card, zip code of the card, and the CVV2 # (the last three digits on the back of the card). Now when you get to your terminal and start to type in the card number and amount the machine may or may not ask you for the AVS (Address verification) and that is because the processor know that if you don't put those 3 pieces of information in the terminal then that transaction will drop to a Non - Qualified transaction therefore charging you a higher percentage. That is why it is important to have your merchant account customized to your needs. Well, that is about it on how processing fees are charged....thanks for your time......have a great and profitable day!!
Phil Herrington "The Credit Card Guy"