Non-Qualified Transactions: Educate Yourself and Save Money!

Businesses function in another manner and this influences the kind of merchant account they will have. It is important for a merchant account provider to establish a merchant with the proper payment processing account during the application to prevent the many problems that can arise if the merchant is improperly classified. Having the proper merchant account not only helps to keep a merchant's rates to a minimum, thus saving them money, but also helps to protect against fraud and charge back.

A retail business had more one on one with their customers and can swipe and offer payment processing of the customers' credit cards through a credit card terminal, processing the transactions in real time. Merchants who have booths set up at places like the flea market have access to a telephone line and electricity is also considered retail if they use a credit card terminal at their location of business.

 Merchant’s that use a wireless credit card terminal are considered to be retail as well. Some merchants that may be stand on a street corner while payment processing the costumer’s transaction, can swipe credit cards through the credit card terminal and process the payments in real time. As a result the merchants get all of the benefits and advantages only offered typically to a traditional retail store.

The one thing that’s related with this time of payment processing is the merchant is not one on one or face to face with the customer at the point of sale; the transactions are usually keyed into a POS software or credit card terminal.

Even though the very first payment processing may occur in a retail environment, face to face with the merchant or swiping the credit card through a credit card terminal, every transaction after will not be swiped. Because these payment processing transactions comprise the majority of the transaction for this merchant they would be considered a CNP merchant.

The Internet business is related to a CNP business. The distinguishing characteristic between the two is how the customer's credit card information is acquired. An Internet merchant acquires their customers' payment processing and credit card information through their website. The customer's information is physically captured and transmitted through the merchant's website.

A mobile business is like a retail business. They are one on one with their customers at the time of sale. The main distinction is that a mobile business does not have the means for payment processing in real time. This is the result of electricity or a phone line being accessible at the point of sale.

To balance for the lack of resources to payment processing in real time, a mobile merchant uses a manual imprinter to capture an imprint of their customers' credit cards and obtain a verified signature. This allows them to manually process the payment processing at a later time. It also submits the mobile merchant additional charge back protection typically only for retail merchants.

When you are a merchant who processes credit cards, especially card-not-present transactions, like those done over the Internet or phone, you will typically run into two rates on your statement. You will have a markdown or discounted rate for qualified transactions, and you will have a discount rate for non-qualified transactions.

Typically the discount rate for qualified transactions is the headline you see when you sign up for a new merchant account, and sometimes providers will purposefully low ball you a lower qualified rate (2%), but hit you with a bigger non-qualified rate (4%), knowing that many more of your transactions will be processed at the higher rate.

Each provider has rules for what constitutes qualified and what constitutes non-qualified. Typically for an Internet merchant you must run an AVS (address verification system) check and run the CVV code from the back of the card for the transaction to be qualified, but even then. If the card is certain types of reward cards, or business cards, or from a foreign bank, you can still be non-qualified.

If you also send incomplete information to your payment processor, you may also be downgraded to non-qualified. Just because a field isn’t required for the system to work, doesn’t mean it isn’t needed by the merchant or otherwise would be beneficial to include.

When using software, make sure you pass everything possible to your payment processor, even if you think it is redundant, even if it isn’t required, if you have the information, pass the information. And when signing up for a new merchant account, ask for the discount rate for non-qualified transactions as well.