Also referred to in the credit card processing industry as a “Qualified Discount Rate” or “Qualified Transaction Fee,” this fee is found in tiered/bucket merchant account pricing schemes. The Qualified Rate is usually part of a three-tier fee model with the other two tiers most often called “Mid-Qualified” and “Non-Qualified.” Merchant account providers primarily determine which rate tier a merchant will incur based on a customer’s card type. The Qualified Rate is typically the lowest rate. Generally, the only cards that fall into the Qualified tier are credit cards that do not have an attached reward program such as miles or points, and signature debit transactions where the debit card does not have an attached rewards program – generally subject to these cards being swiped through a terminal or credit card reader and the transactions being batched by the merchant within 24 hours. There are many variations of these tiers and associated names because there is no industry standard on how rates and fees can be structured or what they must be called. Many of the more ‘sketchy’ payment processors only advertise or quote the Qualified Rate to merchants because it is the lowest and most attractive fee. The quotes often look something like “1.59% + $0.10 per transaction,” but fail to mention that 50%, or less, of a merchants transactions will experience this low rate. The other 50+% will be charge at the higher Mid- and Non-Qualified tiers.

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