What's in your bucket?

Maybe you're wondering what I'm talking about here. Let me explain. In any kind of a tiered pricing model for accepting credit cards, your processor decides which "bucket" or tier they will put transactions. Okay, let's say you are on a Three Tier Pricing model. Your statement would have Qualified, Mid-Qualified and Non-Qualified transactions.

Typically, in this model, when you swipe either a debit or credit card, thru your terminal/software, it will be processed at the Qualified level. Usually, this is also your best rate as well. Now, let's say you hand-key a transaction from a phone order or simply a worn out card that your machine won't read. Most (not all) processors would then treat that as a Mid-Qualified transaction at a higher rate than your Qualified rate. Now, this certainly is justified because the costs to the processor, due to the perceived higher risk, is more so it is passed on to you. Typically, what falls into the Non-Qualified category would mostly be corporate type card transactions. However, some processors, knowing that their merchants don't know much about this industry, will clear even some Rewards cards in this Non-Qualified category. The big question here is, do you ABSOLUTELY KNOW what category ALL or your different transactions are falling into? You should! Ask your current provider to thoroughly explain and if they don't to your satisfaction....find another provider. Now, of course, you could simply go to my website and purchase my ebook on credit card processing. It has received rave reviews in educating merchants around the country.

Maybe, you are on a 4 Tier Pricing model. In this case, the 1st Tier would represent debit cards swiped. The 2nd Tier would be credit cards swiped. The 3rd Tier would be hand-keyed and some Rewards cards. And last, but not least, the 4th Tier would mostly be corporate cards. However, you still have this "bucket" situation going on here. Each processor can put whatever cards they want into any "bucket" they desire. Again, all the more reason for you to really become educated.

Over the past couple years we have seen a surge in Rewards type cards being issued and used. You possibly have one or more in your wallet. When customers go shopping in your establishment and they have a "generic" V/MC in their wallet and a card that pays them some sort of reward for their purchase, which one do you think they will use? Guess what! You pay more to accept them and, indirectly, you are helping the card issuing bank to pay the reward to the customer. It's kind of like paying them to shop with you. Nice huh?

I had a merchant show me a recent statement from their provider. They were informed that as of October 2008, Visa Rewards 2 cards that had previously been cleared as a Mid-Qualified transaction will now be treated as Non-Qualified. Keep in mind now that Visa didn't raise the Interchange Rate on these card types in October. The processor, seeing an increase in these in the marketplace, decided it was a great way to make more off the merchant. Oh, and also, the processor told them, in addition, they would be raising their Non-Qualified rates by .20%. Ouch! The, the DOUBLE WHAMMY!

The bottom line of all this is simply you need to get educated. If I can be of any assistance, there are numerous ways to contact me on this site.

Thanks for coming by