For any retailer or service provider, one of the keys to being successful is being able to provide customers with the convenience of having a number of different payment options. One payment option that needs to be accepted is credit cards, which are very convenient for customers. In order to accept credit cards, businesses will need to have a merchant account established. In order to save the most money possible, a business should do their best to find the lowest merchant account rates possible.
When a business searches for merchant account services, they will find that they rates they are charged could vary quite a bit from one service provider to the next. Typically, the merchant account rates follow a three tiered system. The first tiered system is typically the cheapest. Under this tier, a retailer is allowed to accept standard credit and debit cards either online or in person at a physical store. This is the cheapest of all merchant account services.
The second tier, which is also known as the mid-qualified rate, is the rate that is charged for cards that are not accepted by the first tier pricing system. The types of cards that are offered under this pricing system are typically credit cards with high rewards programs. Credit card providers typically charge these higher rates as they will have to offset some of the costs that come with providing rewards to their customers.
The most expensive merchant account rates come with the third tier, or non-qualified rates. Merchants that fall into this category typically have less conservative credit card acceptance rules, which add risk to the credit card provider. For example, merchants that fall into this category are not required to settle credit card batches on a daily basis, or they may not be required to verify zip codes when accepting credit cards.