Got Web Ideas? Fishing for the Answers?
Think Outside The Code First!
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Facts, Thoughts, and Opinions About Web Development and Business Strategy
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Web merchants should look closely at the transaction rates when choosing a payment processor such
as Authorize.net or PayPal PayPro. You will pay a higher fee than they advertise if you are going
to be processing cards on your Website with your own processor.
Card transaction rates are broken down in to three categories
- Qualified
- Mid-Qualified
- Non-Qualified
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Any transaction will be on of those three qualifications.
Qualified transactions offer the lowest processing rate which is also the rate they will use to advertise
their service. However, qualified means that you have swiped the card. Since you won't be swiping
cards when taking orders from your Website, you will never get the qualified rate.
Mid-Qualified is the rate that most online merchants will receive and it will be a higher rate than
they advertise. You will need to read the terms and conditions to see what the Mid-Qualified rate
is. Usually they tack on roughy 1.0% to the qualified rate. Thus, if the qualified rate is 2.19% and
the mid-qualified rate incurs an additional 0.70% then you will actually be paying 2.89% per sales
transaction.
Non-Qualified rates apply to high risk orders. Non-Qualified it substatially higher. It may double
the transaction rate or more. Non-Qualified will apply to foreign orders and it will also apply to orders
where you process the card without using Address Verification (AVS),
the process in which the address for the credit card is verified when you submit the payment. It must
match or the transaction will fail. Web merchants should always use AVS, not only because it is cheaper,
but also for security.
Some banks will allow you to process cards without using AVS. This means you can process the payment without
entering the address for the card. If you do this then you will be paying a much higher transaction rate
since it is now a high risk transaction..
Many banks, such as Wells Fargo, make AVS mandatory. Even if you set your process to ignore AVS, it still
will not pass the bank's standards if AVS fails. It is automatically turned on no matter what. You must always
provide the billing address for the card and it must always pass. No exceptions.
Please note that this is not up to the processor. The processor may allow you to turn AVS on or off but the
bank may require it no matter what. Even if you disable it, if the address fails then so will the transaction.
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