What Is Straight Pass Through

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Information about What Is Straight Pass Through

Published on July 27, 2008

Author: sptrobb

Source: slideshare.net

Description

Learn about straight pass through merchant accounts and signifigantly lower your credit card processing fees.

 

It is when you, as a business, receive surcharges from Visa and MasterCard at true bank cost

Let me explain …

With a merchant account there are two price points: 1. Your base discount rate

With a merchant account there are two price points: 1. Your base discount rate This is the rate for transactions when a normal consumer credit card is used

With a merchant account there are two price points: 2. Surcharges

With a merchant account there are two price points: 2. Surcharges These are added to the base discount rate on transactions where a rewards card, corporate card, etc. are used or when the credit card in not swiped.

First let’s look at a typical merchant account without straight pass through… Often called a " tiered rate " account.

Your merchant account would have fees like this… base discount rate of 1.89% and $.20 per transaction mid-qualification rate of 2.50% and $.30 per transaction and non-qualification rate of 3.20% and $.40 per transaction

Let’s define what these terms mean…

Base Discount Rate = the rate for generic consumer cards that are present and swiped

Mid-Qualified Rate = the rate for swiped rewards cards or generic consumer cards that are keyed in

Non-Qualified Rate = the rate for corporate and business cards or for any other type of transaction not meeting guidelines or transactions that were not batched in a timely manner

So let’s review those rates again… base discount rate is 1.89% and $.20 per transaction mid-qualification rate is 2.50% and $.30 per transaction and non-qualification rate is 3.20% and $.40 per transaction

Now let’s see how rates on a straight pass through account work base discount rate is 1.89% and $.20 per transaction + surcharges direct from Visa and MasterCard

So how much of a difference does straight pass through make?

EXAMPLE #1 Swiped Visa Rewards Card 2.50% + $.30 2.00% + $.20 Actual Rate (mid-qualification) .11% Visa Surcharge 1.89% + $.20 1.89% + $.20 Base Rate Regular Account SPT Account

EXAMPLE #1 Swiped Visa Rewards Card With a $100 purchase the straight pass through account fee would be $2.20; for the tiered account $2.80. So a straight pass through account would give you a .60% reduction on this type of card!

EXAMPLE #2 Keyed in, card not present Visa or MasterCard 2.50%+$.30 2.20%+.20 Actual Rate (mid-qualification) .31% Surcharge 1.89%+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

EXAMPLE #2 Keyed in, card not present Visa or MasterCard With a $100 purchase the straight pass through account fee would be $2.40; for the tiered account $2.80. So a straight pass through account would give you a .40% reduction on this type of card

EXAMPLE #3 Visa EIRF 3.20%+$.40 2.65%+$.20 Actual Rate (non-qualification) .76% Visa Surcharge 1.89%+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

EXAMPLE #3 Visa EIRF With a $100 purchase the straight pass through account fee would be $2.85; for the tiered account $3.60. So a straight pass through account would give you a .75% reduction on this type of card

EXAMPLE #4 Corporate Cards 3.20%+$.40 2.55 %+$.20 Actual Rate (non-qualification) .66% Visa Surcharge 1.89 %+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

EXAMPLE #4 Corporate Cards With a $100 purchase the straight pass through account fee would be $2.75; for the tiered account $3.60. So a straight pass through account would give you a .85% reduction on this type of card

EXAMPLE #5 MasterCard Check or Debit Card 1.89%+$.20 1.36%+$.25 Actual Rate -.53%+$.05 MC Surcharge 1.89%+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

EXAMPLE #5 MasterCard Check or Debit Card No, the minus sign was not a mistake; with check cards you, as a business, are entitled to receive a rebate from both Visa and MasterCard. With a $100 purchase the straight pass through account fee would be $1.61; for the tiered account $2.09. So a straight pass through account would give you a .48% reduction on this type of card

Effective Rate Allows you to see what you are really paying for your merchant account. Here is an example: Total bank card Volume - $72,053.25 Total merchant account fees – $1942.52 Effective Rate: 2.695% Base Rate – 1.79%

Now it’s time for a quiz

Question #1 When shopping for a merchant account, what price point is more important? A. Base Discount or B. Surcharges

Answer: You need to pay attention to both price points. For years merchant account providers have made the focus the base discount rate and have made most of their profit on the surcharges. It is time for that to change.

Question #2 How can you make your merchant account straight pass through? A. Contact your current provider and renegotiate or B. Contact a new provider that will provide you with a straight pass through merchant account

Answer: Why would you contact your current provider if they have been hiding fees from you. Do they really deserve any more of your business? The answer is to go with a company that is transparent and only creates straight pass through merchant accounts.

To get your very own straight pass through merchant account

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