How is my Credit Card Transaction Rate Determined?

By Frank Nuck, Financial Control Solutions

Your credit card transaction rate is primarily determined by federal law and RISK.

“Risk” in this case refers to the risk of dispute over, or cancellation of, a given CC sale. “Risk” will be extrapolated from factors characterizing the, 1) merchant (a sporting goods store will tend to pay more than a doctor’s office), 2)product/service purchased (see no. 1 above), and (3) the nature of the “plastic” accepted (debit card transactions are less costly than any CC taken over the phone).

Additional merchant characteristics include, average per-sale value, average monthly transaction volume, seasonality of merchant and longevity of merchant. Think of “risk” as the potential costs involved not only in consummating the sale, but in modifying or unravelling the sale if disputed. Many businesses will not be accepted by a given merchant services provider. Collection agencies, for instance, are more likely to be rejected as applicants.

Contact Financial Control Solutions for more information about our credit card processing services.