Hoteliers, understanding what you really pay to take credit cards doesn’t have to be so complicated.
***Guest post from Novera Payment Solutions, a WebRezPro partner***
If you are like most business owners, you negotiated a “GREAT” deal on your credit card processing rates, but when you received your statement from your merchant processor, you were surprised to find added extra fees. Unfortunately, it’s common in the credit card processing industry for merchants to be lured into attractive credit card processing rate deals, only to find out later they have been misled. Reading the fine print could have prevented it, but really … who reads the fine print?
To avoid unpleasant surprises, understanding credit card processing rates is important. As a business owner, there are three terms in the merchant processing industry that you should make yourself familiar with: Qualified Credit Card Processing Rate; Mid-Qualified Credit Card Processing Rate; and Non-Qualified Credit Card Processing Rate. Let’s go!
Qualified Credit Card Processing Rate
The qualified rate in a traditional tiered pricing structure is the lowest rate a business will pay. Typically, a debit card or non-reward credit card that is “swiped” or “inserted” falls into this rate category. This is the rate that is advertised by the processor because it is the most attractive. However, in the lodging industry, you are not always accepting cards face to face, so only a portion of your transactions are actually categorized into this lower rate bucket.
Here are a couple of additional things your payment processor might not tell you:
- Typically, only non-reward consumer credit cards and debit cards are included in this rate bucket. You know those “reward” cards offering the likes of “cash back” on purchases? If a guest uses one of these cards during the purchase, you will not get the “qualified” rate on your fees. Instead, it will be an increased non-advertised rate.
- Beware of processors that use bait and switch tactics where they advertise a qualified rate lower than MasterCard and Visa’s lowest credit card underlying wholesale cost. When this happens, they only route debit card transactions to this bucket. That means all other credit card transactions go to the higher mid-qualified and non-qualified rates automatically, regardless of the type of credit card used in the transaction.
Mid-Qualified Credit Card Processing Rate
This is the most nebulous credit card processing tier (or fee bucket). Typically any consumer credit card with a basic rewards program will find its way to the Mid-Qualified bucket.
What else they might not tell you:
- Do you swipe credit cards at your reception/front desk? Typically, swiped reward credit cards, as well as consumer transactions that are manually keyed in (both credit and debit) hit the mid-qualified rate bucket.
- Additionally, the merchant processor can change what makes a transaction qualified without notice. That means a transaction that was qualified when you signed the contract for your credit card processing may not be qualified six months down the road.
Non-Qualified Credit Card Processing Rate
This is the most expensive rate bucket and can be the most common, hence the surprise added cost to your credit card processing fees. Typically, all transactions using high-end rewards program cards are routed here.
What else they might not tell you:
- Business card purchases are typically routed here. Do you often have guests traveling for business? If so, there’s a good chance that a large portion of your credit card transactions are being routed to the highest fee bucket, the non-qualified rate!
- Do you key in transactions by hand? If you do, and if the complete billing information isn’t entered, your processor likely pushes that transaction to the non-qualified rate bucket and you pay a higher fee.
Knowing the difference between card processing rate tiers helps you make better decisions when choosing a payment processor—and avoids unpleasant surprises on your statement!
Novera’s Innovative and Transparent Pricing Difference
Our transparent Cost Plus Flat Fee pricing model provides WebRezPro users with the fairest rates available anywhere. Our commitment to educating our clients on the processing industry is helping businesses across the country make more informed decisions when it comes to payment processing.
**Special Offer for WebRezPro Clients** – Receive a FREE EMV Card Reader when you sign up for a Novera Payment Solutions integrated credit card processing account. Limited supply available.
Contact Novera for more information.