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Yes, Discover really is 1%, too bad we don't have many discover card users. As of April 1st, we suddenly have a whopping 75% of our Visa/MC transactions being classified as non-qualified and given a 3.9% rate! I'm given the reasoning that business cards, some government cards, and rewards cards are higher risk or are costing the processor more. How can discover be at 1% and Visa/MC suddenly demand 3.9%? This is crazy. There must be somebody in the middle making a lot of money on us.
Does anyone have any recommendations for processors that have reasonable rates for non-qualified transactions? Also, if we do $75,000/mo in Visa/MC would we be able to get interchange-plus rates?
I'm going to request a rate review from our current processor, but I need some rate quotes from other processors to use as leverage.
call a few processors and tell them your volume and that you want interchange plus - i found one in maine by googling the term - didn't end up using them, but they offered it - our volume is several times yours, don't know if that would matter...
The downside is the $20/mo. fee; how many 3.9% transactions would you have to avoid to make up the $20/mo.?
Usually qualified vs. unqualified has to do with whether you are submitting correct address information with the transaction. A non-swiped, no address information transaction will always be non-qualified. You need at least to pass along the zipcode, if not more information to qualify for the qualified rate.
How do you get Discover rates of 1%? Our Amex rate is 3.4%
One of the easiest remedies to avoid non-bankcard processing charges is to look toward the non-bankcard providers for your processing needs. American Express and Discover will each provide a merchant with the capability to process all major credit cards including bankcards (VISA/MasterCard).
List of large acquiring banks from VISA:
Visa List [usa.visa.com]
[edited by: lorax at 12:53 pm (utc) on May 11, 2006]
[edited by: minnapple at 12:13 am (utc) on May 12, 2006]
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I would suggest checking out a "friendly" site we have all heard of for payments that offers 2.9% + $0.30 for virtual terminal transactions.
Actually, (assuming we are talking about the same friendly site :) if you will be processing more than $10,000 per month, the rate would be 2.2% + $0.30 plus the $20 monthly fee.
When a merchant account provider (whether it's a bank, an independent sales organization, AMEX, Discover, or otherwise) sets up a merchant account individual identification numbers are used to track the account. Each card originator (AMEX, VISA, Discover, etc.) attaches there own unique merchant identification number (MID) to the same account to track and differentiate their individual transactions.
For example, if you were to go to merchant provider "A" to obtain a merchant account and you opted to accept VISA, MasterCard, AMEX, and Discover - you would be granted a merchant account that had three unique MID numbers; one for VISA/MasterCard, one for AMEX, and one for Discover. If after a few months you decided that you wanted to switch merchant account providers from provider "A" to provider "B" only your VISA/MasterCard MID number would change with the switch to the new provider and your AMEX and Discover MIDs would remain the same and simply carry over.
This is the reason that you (or anyone else) is not getting ripped off. Only AMEX and Discover process AMEX and Discover transactions - the individual provider has no affect on the percentage that these two cards will process at because the MID for each always runs the transaction back to the originator regardless of the merchant account provider.
Why does the Discover processing rate vary from merchant to merchant?
A few posters have said that they have a substantially lower discount rate than others for Discover transactions and this is explained by Discovers qualification matrix. Discover is unique in the way that they operate on a tiered discount grid that is directly related to a merchant's average ticket.
Discover does not actually have a standard discount rate, instead, their processing rate will vary depending on the average ticket amount of the individual merchant for a specified time period. For example, a merchant with an average ticket of $20 will have a higher rate than a merchant with an average ticket of $1000.
We have a call in for a rate review. Could someone elaborate on Interchange Plus?
I think you are understanding me wrong. Pretend I was a merchant that did not sign up for visa or mastercard - all I accepted was Amex. I am talking about the rate Amex charges directly to me - forget about my merchant bank - I don't care about their fees for this example. How do I receive higher rates (from Amex directly) than other net merchants when I am no more riskier and processing more per month than other merchants who are receiving lower rates?
How do I receive higher rates (from Amex directly) than other net merchants
-First and only rate increase in ten years!
Why does this make any sense? Fees with Visa, MC, Discover, PayPal, and Google Checkout only go down, in my experience. Considering the tech-heavy aspect of this business, their fees should approach free (see the recent article in Wired).
Since their fees are based on a percentage of my sales, not a fixed price, inflation has no effect here. Total nonsense.
-Our customers are loyal and will only buy from merchants who accept Amex.
Sure, because Amex gives them so much back in perks, because they charge us merchants so much to take their card. But I was once an Amex user (beyond just Costco, that is) and I would be happy to pull out my Visa for any place that didn't take my Amex. I really doubt people jump ship on that front.
-If you take our logo off your website, that's "suppression" and against our terms of service.
They had enough gall to actually hint that I should be careful if I try to de-emphasize their card on my site. God forbid I try to save myself 1.25% per transaction. Apparently, I've signed away my right to do that. So I have to cancel my entire account to get ride of these guys.
I realize that these guys as a group (credit card companies) have lobbied hard to earn their legal protections. You can't get a cash discount anywhere, because these guys have taken away that option with laws against different pricing for different payment mechanisms.
I think that Google Checkout and PayPal are maybe the Davids here. If they can get fees down, maybe we can push more business their ways. But I only see PayPal having a real edge, since they can do ACH transfers. For Google, they presumably just have rock-bottom fees, and then they layer that with a tiny add-on for their services.