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Seven Terms That Guarantee Your Small Business is Being Overcharged for Credit Card Processing

Whether youve just started shopping for a merchant account or youve had one for years, dont let a credit card processing company take money right out of your pocket! There are seven terms to avoid if you want to ensure that youre not being overcharged for credit card processing. Go ahead and open up those statements and agreements from other companies and start searching for any of these words

1. QUAL This is short for qualified rate which indicates immediately that a merchant account provider is giving you threetier pricing (the worst option for small businesses). A qualified rate is the percentage rate that you (as a business) will be charged whenever you accept a consumer credit card and process it in a manner defined as standard by a merchant account provider. This is the lowest rate youll be charged within a threetier pricing structure, and its usually the rate that will be quoted to you upfront. (By the way, corporate credit cards and rewards cards are never processed at a qualified rate so theyll cost you even more to accept.)

2. MID_QUAL Also known as a midqualified rate, this is the percentage rate you will be charged whenever you accept a credit card that does not qualify for the lowest rate (the qualified rate). This may happen for several reasons such as:

A credit card is keyed into a credit card terminal instead of being swiped.
A special kind of credit card is used, such as a rewards card or corporate card.

A midqualified rate can be from 1.50 percent2.50 percent higher than a qualified rate, and the use of rewards cards can be as high as 40 percent of transactions. Be aware that this is going to impact your bottom line significantly!

3. NONQUAL The nonqualified rate is the highest percentage rate you will be charged. In most cases, all transactions that are not qualified or midqualified will fall to this rate. This may happen for several reasons such as:

A credit card is keyed into a credit card terminal instead of being swiped and address verification is not performed.
A special kind of credit card is used like a business card and all required fields are not entered.
A merchant does not settle their daily batch within the allotted time frame, usually past 48 hours from time of authorization.

A nonqualified rate can be from 2.00 percent2.50 percent higher than a qualified rate, and the merchant account provider is taking money right out of your pockets as a business owner.

4. SURCHARGE Although qual, midqual, and nonqual may not show up on your monthly statement, oftentimes a merchant account provider will lump the extra fees from midqual and nonqual transactions into one bucket that shows up as a surcharge. These are extra charges for transactions that didnt meet the requirements as a qualified transaction.

5. DISCOUNT RATE By reading the term discount, you may feel like youre getting a bargain, but youre not. Discount does not refer to the common meaning of the word, but it deals with computations of present value (e.g. net present value or discounted cash flow). It simply comprises all of dues, fees, assessments, network charges, and markups that you are required to pay for accepting credit and debit cards, the largest of which by far is the Interchange Fee (charged by Visa and Mastercard). Dont think youre getting a discount!

6. ONE RATE or FLAT RATE Merchant account companies will quote one flat rate, and they hope you dont read the fine print. The low rate thats shown is just for qualified transactions under a tiered pricing structure, which would only include nonrewards, nonbusiness credit cards (standard Visa/MasterCard) that are swiped on the spot. This will be a very small percentage of your transactions.

7. THREE RATES or THREE TIER PRICING As mentioned above, threetier pricing (often disguised as one flat rate) is the worst option for small businesses due to the fact that very few transactions receive the qualified rate which is the low rate thats often advertised.

Dont let all these special terms confuse you. Take the time to understand each one, and look closely at the contract/agreement thats being offered to you. Do your homework, and ask every question that comes to mind. Dont be embarrassed. This is your business, and you have the right to know what youre being charged for.

If youre shopping for a merchant account: Dont sign up for an account without thoroughly reading the agreement that is provided to you. Look for these seven terms to see if youre being overcharged.

If you already have a merchant account: Pull out the agreement you initially signed and open up your most recent statement. Look for these seven terms to see if your merchant account provider is taking money right out of your pockets.

Remember, there is a better solution. Dont be overcharged! accept credit cards

AUTHOR RESOURCE BOX: Danny Choi is the Founder and CEO of Best Merchant Rates a merchant account provider that "actually" cares about small businesses. Founded in 2005, Best Merchant Rates exposes the trickery of merchant accounts, educates on the truths of credit card processing, and empowers with transparent pricing.

KEYWORDS: credit card processing, merchant account, small business

CATEGORIES: small business, business, financial services, credit card processing, merchant account