When you get your credit card processing statement at the first of the month it is full of mysterious terms like 'mid-qual', 'non-qual', 'discount' and 'auth.fee'. Understanding this terminology is the first step to fully understanding what it is costing you to process your credit cards.
The vast majority of statements are 'tiered'- that is, the processing company has taken the hundreds of types of credit card transactions and grouped the similar types into like categories, or tiers. The most common tiers are as follows:
Pin-Based Debit or On Line Debit- transactions made with a debit card and with the card holder entering their pin number into a pinpad or terminal. This tier usually has the lowest rates. However, the debit companies that own the networks these transactions run on charge the processing companies usage fees that are almost always passed on to the merchant (A fact seldom mentioned by the processing company rep). Look for Debit Network Fees, Network Access Fees or just Network Fees on your statement, and add those to your pin-based debit charges to get the true cost for this tier.
Debit, Off Line Debit, or Bank Card- transactions made with a debit card, but without a pin number being entered.
Qualified or Credit- a transaction in which a credit card is swiped, not hand entered. The most common type of transaction.
Mid-Qual or Mid Qualified- a swiped transaction with a credit card that has some sort of award for the card holder; cash back or airline miles or anything of value. The credit card companies pay for those awards by charging you, the merchant, a surcharge on the transaction. There are several lawsuits winding through the courts to try and end the practice of charging the merchants for these types of transactions, or at least let the merchant choose to not accept rewards cards.
Non-Qual or Non Qualified- transactions that are 1) keyed into a terminal, rather than swiped, or 2) held by a business rather than an individual, or 3) transacted with a card that is backed by a non-US bank, such as The Royal Bank of Scotland or Credit Suisse. More of these types of charges end up fraudulent than other types, so a surcharge is added to them, also. Go to http://www.checkmycreditcardprocessor.yolasite.com
So there you have it- what just a few of the terms you see on your statement mean. Down the road we will talk about what interchange fees are, and what all the add-on fees are for, and PCI, and IRS fees, and it goes on and on. Fortunately Central Payment doesn't nickel and dime our merchants to death with fees, so I don't get a lot of "What the heck is this??!!" phone calls. But when I'm out talking to merchants that work with other processors all sorts of things can come up. Learning the terminology behind the fees will help you keep your processing costs as low as possible.