Qualified Rate Definition

Qualified Rate Explained:

What is a Qualified Rate? 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.” 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.

The Qualified rate is often the only rate that is advertised or quoted 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.

Merchant account providers primarily determine which rate tier a merchant will incur based on a customer’s card type. 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.

Learn how everything thing you need to know about rates and how to get the lowest fees from any provider in “Fee Sweep: How to Get the Merchant Services You Need Without Getting Scammed.”

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I'm a small business owner, former credit card processing sales director, author of this post and creator of this website. I've seen the merchant account industry from both sides of the table and built this website to, hopefully, make your life easier when it comes to accepting credit cards. I review every service provider I can find and track the best merchant accounts as well the worst merchant accounts. I also built the free tool below to find hidden credit card processing fees and overcharges in your merchant account statement. Try it out and contact me to let me know what you think! Thank you for reading my article!

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