Merchant Account - Discount Rate Explained

http://www.merchanthotline.com
800-893-9540

The discount rate is based on the interchange rate that is the rate that one bank will charge another bank or that one department will charge another department within the same bank.

This rate is based on actuary tables that define rates based in part on industries and how the credit cards are processed.

There are two main types of discount rate pricing structures. One is the 2-3 tiered "bucket" system and the other is called "interchange plus" pricing.

The 3 tier approach is as follows:
- qualified discount rate
- mid-qualified discount rate (usually qualified rate + .5%)
- non-qualified discount rate (usually qualified rate + 1%)

These are estimates and can definitely factor into how much you'll pay as a merchant depending on the platform and system you're setup on. A "good" qualified discount rate for retail would be somewhere around 1.5%, for internet, about 2.1%. The mid and non qualified rates can be determined based on those numbers.

Many providers will know that you may or may not understand these numbers and will try to pull a fast one on you as a business owner. Just watch for this. Most of us in the industry are trustworthy, but if it sounds too good to be true, it's possible it is!

If you'd like to work with someone directly, I invite you to contact me and I'll help you get setup or even just answer questions you may have on the topic!

thanks!

Brian
800-893-9540

Playlist: http://www.youtube.com/playlist?list=PL2148A9210BCD184E

or Individually:

1. Merchant Account Basics: http://www.youtube.com/watch?v=RuqOJqIiAQI
2. Pricing: http://www.youtube.com/watch?v=ZLADu1_oZZA
3. Per Transaction Fees: http://www.youtube.com/watch?v=817t-qW_hWA
4. Discount Rate: http://www.youtube.com/watch?v=wSSf6_2tnr8
5. Monthly Fees: http://www.youtube.com/watch?v=jbe-uFo9aFA
6. Setup Fees: http://www.youtube.com/watch?v=Rtnj_FUbp78
7. Ecommerce Info: http://www.youtube.com/watch?v=fZKmX8fbqRU
8. Personal Guarantee: http://www.youtube.com/watch?v=aLKjl6N4TUA
9. Summary: http://www.youtube.com/watch?v=7wo2flJ3RJM

Category:

Howto & Style

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• credit card
• accept credit cards
• payment processing
• merchant account
• discount rate
• payments
• authorize.net