My Merchant Account Blog

Non-Qualified Rate

Wednesday, October 19, 2011

There are a few different reasons a credit card transaction might be downgraded to the non-qualified rate:

credit card association assessing extra charges for rewards or business cards
Lack of timeliness: when a transaction is run, the money is guaranteed for a specific period of time. This is the reason most processors run a daily transaction batch
A keyed-in transaction. In this case, the risk of a chargeback is higher because there is a good possibility the cardholder is not present and therefor there is no guarantee the transaction isn’t fraudulent
Not running an address verification service (AVS) despite having an internet account. This runs a higher risk chargeback

Because some addresses cannot be verified (i.e., your customer lives overseas), this structure makes things more profitable for the merchant account provider. For example, if your standard rate is 2.15%, your mid-qual rate is .5%, your non-qual rate is 1% and you can’t run an AVS, that transaction is going to 3.65%.

Posted by Administrator at 6:56:15 AM in Merchant Account Fees (23) | Comments (0)