Discount Rate Definition

Merchant Account Discount Rate Explained:

What is a Discount Rate? Often called the “Merchant Account Discount Rate” or just the “Discount Rate,” the Merchant Discount Rate is one of two fees that merchants experience when they charge a credit card. For example, in a quoted processing rate of 1.79% + $0.25 per transaction, the Merchant Discount Rate is the 1.79% part of the processing fee. In other words, the Merchant Discount Rate is the percentage half of the processing fee. You can think of it as the percentage discounted from the money you will receive from the sale.

The Merchant Discount rate comes from Visa and Mastercard’s Interchange fee system and is usually divided into three rate tiers: Qualified (lowest rate), Mid-Qualified (middle rate), and Non-Qualified (highest rate). The type of credit card used in a sale will dictate at which tier the processing fee will be charged to the merchant.

Discount Rate Video Explanation

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