Credit Card Rates Explained
Do you know what you really pay to process credit cards?
It can be rather confusing to understand your true credit card fees. Between monthly fees, transaction fees and discount rates - you need a MBA just to figure it out. All Merchant Processors have their own way of presenting fees and transaction charges, so it is often difficult to make comparisons among the myriad of companies competing for your business.
To make sense of it all, the following explains each of the charges you pay to process credit/debit card transactions. You also need to be aware that banks are notorious for miscellaneous monthly fees to make up the loss created by offering low introductory transaction & discount fees (see The Third Type Of Fee section below).
The Two Fees Charged With Every Credit/Debit Card Transaction
Every time you process a transaction, you are charged (1) a transaction fee and (2) a percentage of the total transaction (Discount Rate).
The transaction fee is a flat amount, typically between $0.20 and $0.40.
The percentage charged is variable based on the type of transaction and the type of card used.
Two Categories of Transactions
Discount Rates are typically divided into two categories, Card-Present or Card-Not-Present. The discount rates applied will vary depending on the category with the Card-Present allowing for lower rates and Cart-Not-Present being slightly higher due to the added risk to the bank associated with processing payments without presenting a card.
The lowest rates are typically applied to card-present transactions. Auto-Debits cannot be performed on this type of transaction. It is against PCI regulations to store credit card numbers so that you can key-enter them on your own. The Auto-Debit System® uses a card-present retail merchant account with our provided USB swiper for one-time swiped transactions. (the card is physically swiped through a credit card machine)
All transactions where a credit card is not physically swiped through a terminal, including internet transactions, phone transactions, or credit-card numbers keyed into a terminal, fall into this category. Auto-Debits fall into this category since the credit/debit card is not swiped for the transactions. (any type of transaction where the card cannot be swiped)
Merchant Account Types
There are two different types of merchant accounts you can use to accept Card-Not-Present and Card-Present transactions. It is important to select the correct one because it will significantly affect the fees you're charged. The Auto-Debit System® automatically selects the right account to save you money. For any card-not-present transactions, the internet merchant account is used. For any card-present swiped transactions, the retail merchant account is used. Its the best of both worlds!
This type of account is designed for card-present transactions and requires the use of a credit card swiper/machine. A Retail Account is subject to three levels of fees, each higher than the previous - Qualified, Mid-Qualified and Non-Qualified.
The card is swiped through a terminal, and the merchant batches the transactions within 24 hours. Most swiped credit cards will fall into this category. It is typically the lowest rate.
This rate applies to rewards cards and key-entered transactions. It also applies to charges batched in 24-48 hours, that would be Qualified had they been batched sooner. The Auto-Debit System® batches ALL transactions within 24 hours automatically. The discount rate charged is typically 1%-2% over the Qualified rate.
All corporate and government cards are charged this rate regardless of batch processing time. Other transactions batched after 48 hours are also charged this rate. The Auto-Debit System® batches ALL transactions within 24 hours automatically. This is typically the highest rate charged.
Debit cards are classified the exact same way credit cards are, but the rate for a debit card transaction of the same category and type is typically lower than the rate for a credit card.
This type of account is designed for card-not-present transactions. MOTO Accounts are subject to three levels of fees - Qualified, Non-Qualified and Debit Card rates. Cash Practice® requires the use of our MOTO Account for the Auto-Debit System®.
Most transactions fall into this category, provided the merchant batches transaction within 24 hours. This is the lowest MOTO/Internet rate. The Auto-Debit System® batches ALL transactions within 24 hours automatically.
All corporate, government, and reward cards are charged this rate regardless of batch processing time.
Debit cards are classified the exact same way credit cards are, but the rate for a debit card transaction of the same category and type is typically lower than the rate for a credit card.
Although you can use a Retail Merchant Account to process Card-Not-Present transactions, the fee to do so is significantly higher than it would be when using a MOTO/Internet Plan. Key-entering a transaction into a retail credit card machine results in higher fees, usually 1%-2% over the discount rate.
The Third Type Of Fee (not mentioned above)
Besides Transaction Fees & Discount Rates, merchant companies make money on a third type of fee. If you ever financed a house, you we're probably scratching your head over all the different fees you were charged by the escrow company. Merchant companies have a dirty little secret. They too charge a myriad of miscellaneous monthly fees. The merchant accounts provided by Cash Practice® strategic partner, Processing Point Inc, charges ZERO monthly fees for our internet accounts and only $9.95 for our retail merchant accounts.
| Merchant Account Fees | ||
| Why Our Merchant Accounts? |
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| Why Retail & MOTO Merchant Accounts? | The Auto-Debit System® uses both MOTO (i.e. Mail Order Telephone Order, also known as eCommerce or Internet) & Retail Merchant Accounts so you are always paying the lowest processing fees. Any transaction that is key-entered or auto-debited automatically gets processed with the MOTO account, whereas any card-present swiped transaction (including CP Mobile™) automatically uses the Retail merchant account. You never have to worry about which merchant account to use. The Auto-Debit System® chooses the right one for you. |
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| USA MOTO/Internet Acct | Credit/Debit Cards | Bank EFT |
| Why Use Our MOTO/Internet Merchant Account | The MOTO merchant account is used for all card-not-present transactions process with the Auto-Debit System®. This includes any key-entered or auto-debit transactions. We use this instead of a traditional retail merchant account because the rates for card-not-present transactions are lower with a MOTO merchant account. In addition, if you use your own retail merchant account to key enter more than 20% of your monthly transactions, the merchant company can terminate your account. Our MOTO merchant account is also used to process all Bank EFT transactions, including those processed with the CP Mobile™ App. | |
| MOTO VS. Your Current Retail Merchant Account | Our MOTO Qualified Discount Rate is LOWER than most Retail Card-Not-Present (key-entered) - including our own! | Can't process Bank EFT with Retail Merchant Accounts. |
| Very Low MOTO Qualified^ Discount Rate | 2.30% Visa®, MasterCard® & Discover® Amex® sets their own rate |
1.79% |
| Assessments Fee | 0.13% | N/A |
| Very Low MOTO Transaction Fee | $0.31 Per Transaction | $0.50 Per Transaction |
| Discount & Transaction Fees Monthly Minimum | $25 | $15 |
| Monthly Statement Fee* | $0.00 | |
| USA Retail Acct | Credit/Debit Cards | |
| Why Use Our Retail Merchant Account? | The retail merchant account is used for all card-present transactions in the Auto-Debits System® and CP Mobile™. By using a card-swiper you will get the lowest processing rates possible. The benefit of using the Auto-Debit System® Retail Merchant Account vs. an ordinary credit card terminal are many. Benefits include:
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| Retail Equipment (USB Card Swiper) |
Retail merchant account requires the use of the Cash Practice® USB Card Swiper Order them HERE |
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| Mobile Equipment (CP Mobile™ Card Swiper) |
If you plan on using the CP Mobile™ App to swipe cards on your iPhone®, iPad® and Android™ smartphones, the Retail merchant account requires the use of the Cash Practice® Mobile Card Swiper. Order them HERE | |
| Very Low Retail Qualified^ Discount Rate | 1.50% Visa® & MasterCard® Debit Cards 1.70% Visa®, MasterCard® & Discover® Amex® sets their own rate |
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| Assessments Fee | 0.13% | |
| Very Low Retail Transaction Fee | $0.19 Per Transaction | |
| Monthly Retail Access Fee* | $9.95 | |
| Monthly Statement Fee* | $0.00 | |
| Merchant Security Fees | ||
| Annual TrustWave PCI DSS Analysis Fee | $100 for 1 Merchant Account (Retail or MOTO) $150 for 2 Merchant Accounts (Retail & MOTO) |
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| AVS (Address Verification Service) | $0.00 | |
| Monthly Access Fee* | $0.00 | |
| Monthly Gateway Fee* | $0.00 | |
| *For U.S. Accounts, Zero monthly fees for MOTO merchant account, however Qualified Credit/Debit Discount fees have a $25 monthly minimum and Bank EFT has a $15 monthly minimum. Retail merchant account has a $9.95 monthly access fee. ^Mid Qualified Rate add 1.29% & Non-Qualified Rate add 1.59%. Rates are subject to change. Additional VISA, MasterCard and Discover network fees are passed through by all merchant processing companies and will appear on your merchant statement. To see a list of these additional network fees, click HERE Auto-Debit System Lite memberships with only a Retail account have $25 monthly minimum and 1.70% debit card rate. Each merchant account has an Annual $100 PCI DSS Compliance Fee collected by Processing Point in two payments on behalf of TrustWave, the Approved Scanning Vendor. To make it easier for our members, each year the $100 will be split into a $50 charge on your April merchant statement and a $50 charge on your June merchant statement. Memberships with both a MOTO & Retail Merchant account have an annual PCI DSS Compliance Fee of $150 for both accounts ($50 Savings). Failure to comply with PCI will result in $15 per month fee for each merchant account. See PCI.CashPractice.com for details. Canadian Accounts have an additional $100 Setup Fee, $15 Monthly Fee, 2.55% Qualified Discount Rate and $0.15 Transaction Fee. Visa & MasterCard each have a $15 Monthly Minimum in fees. Canadian accounts also have a $150 Early termination fee if account is closed within first thirty-six months. Merchant accounts are provided by Processing Point Inc. Processing Point Inc. is a registered ISO/MSP of Merrick Bank and Harris Bank. |
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$$ Saving Tips
The Auto-Debit System® automatically selects the right account to save you money. For any card-not-present transactions, the internet merchant account is used. For any card-present swiped transactions, the retail merchant account is used. Its the best of both worlds!
Make sure you know what you are really paying! Get a FREE, no obligation, credit card rate analysis from Cash Practice®. If you would like a rate comparison, fax all pages of your most recent merchant account statement to 877-291-5825. Be sure to include a cover sheet with your contact info and "Rate Comparison" written on it.