How to Get the Best Credit Card Processing Rates

Every day, more and more consumers are using credit cards everywhere: at their local coffee shop, their favorite lunch spot, all small and major retailers - the list is endless. While this is a more convenient option for the customers, it can sometimes cause the business owners quite a headache. Every time someone hands their card over at a place of business, that business owner is charged just for swiping the card, not to mention to the cost of processing the transaction, and the cost of their merchant account being open.

While there are many different rates and fee schedules available to business owners, there are three main types of credit card accounts: in person "swiped" accounts, where the customer's card is swiped through a credit card terminal, a "keyed" account, where the customer's card number is manually entered into the credit card terminal, and an "internet" account, where the card information is entered into a merchant's website via a secured shopping cart. For most business owners, the swiped account is the best and cheapest way to go. With this type of account, you also have the option of using a pin pad, for customers to enter their pin number in and use their card as debit. With pin debit transactions, the fees are minimal, usually consisting of a small transaction fee plus the applicable debit network fees. If a customer swipes their card through the terminal, the merchant is getting the best rate possible for that card.

Keyed and internet accounts are typically interchangeable, both with their rate structure and the requirements to get the best rate for the cards that are being used. Whenever the card number is manually entered into a terminal, a payment gateway, or a website, the information required for the transaction consists of the full card number, expiration date, billing street address and zip code, as well as an order or invoice number (this number can be whatever the merchant wishes, even if the same number is used for every transaction). If all of that information is entered, the merchant will be charged the correct rate for that card.

The thing to understand about getting the "best" or lowest rate for every card that you take is that there are many different card categories and each have a certain price tag attached to them. Personal Mastercard or Visa cards go under what is called the "qualified", which is the lowest rate a merchant will have. Rewards, Points, or Mileage cards all fall under the "mid-qualified" rate, which is typically the second tier rate in the pricing structure. International cards, government cards, business cards and enhanced cards will fall to the "non-qualified" rate, which is the highest rate, typically in the range of 3 - 5%. Unfortunately, there's no surefire way to identify all of these cards, so the merchant sometimes has a difficult time in expecting what he or she will pay in processing fees every month.

While merchant processing does take a percentage of the merchant's profit, it also enables them to provide services to a wider range of customers, which increases their profit margin long term.