Choosing a merchant account is the first and foremost step when you star a new business. And to survive the tough competitive business market, it is necessary for you to provide simple and easy options for making payments. Before making any decision regarding the credit card processing services, it is important to understand everything about the discount rates and transaction fees. It will lend you a helping hand while picking up a credit card processor company.

Discount rates and transaction fees go hand in hand. Both are paid while processing a credit card transaction. The discount rate is a percentage that is deducted from the total amount of the sale. For example: If your qualified discount rate is 2.20% and you charge a customer's credit card $100, then you would pay $2.20 to process that transaction. But that is not all - you also pay a transaction fee as well. If you have a transaction fee of 25 cents, then your total cost to process that $100 dollar credit card transaction would be $2.45.

The percentage of discount rate changes, every time you make a payment. It depends on a number of factors like type of card and how you actually process the card. Most personal debit and credit cards comes under the qualified rate category. However, discount rate is higher, if you opt for a corporate, business, government, international, or personal rewards card.

The discount rate on these types of cards could be from 1% to 2% over the qualified rate. This means that if your qualified rate is 2.20% and you accept an international card, your rate could be as high as 4.20%. Over time this can add up, so it is very crucial that you factor this into your pricing while deciding the charges of your product or service. It is also important in case if your plans include doing a lot of business to business transactions or selling internationally.

How you process the credit card is another deciding factor that influences the discount rate. Merchants, who swipe credit cards usually pay a lower discount rate, which is usually close to 1.80%. on the other hand, merchants who key in credit cards using an internet merchant account pays a qualified rate of 2.40%.

Most credit card processing companies refers to their qualified rate while advertising or trying to sell you over the phone so it is imortant on your part to ask about qualified, mid qualified, and non qualified rates too while choosing a company for credit card processing services.