It is important that you understand how payment processing works from the time your customer swipes or inputs their data, all the way through to when you are paid for the transaction; so that you can fully understand the service you are paying for and what you are being charged for.

A transaction is made through a terminal or online software that will send the payment information to the credit card’s issuing bank, which is where the funds will be coming from. Once the payment has been verified and the payment is approved, it will take 24 hours for the payment to be processed before any funds are transferred. At the end of the processing period, each bank will settle with the merchant for the batch of transactions for the day.

Most processors break down Visa and MasterCard transactions into three categories:

• Qualified: A standard Visa or MasterCard is swiped through a terminal or mag reader and batched within 24 hours.

• Mid-qualified: A standard card is keyed into a terminal or software using AVS (an address-verification system), or a corporate card is swiped.

• Non-qualified: A standard card is keyed in without AVS, a corporate card is keyed in, or a transaction is not batched or settled in 24 hours.

Due to the increased risk, transactions that qualify as mid or non-qualified transactions are going to be the most expensive to process. American Express and Discover offer different rates than Visa and MasterCard and do not offer tiered rates for mid or non-qualified transactions. In other words, they charge you a single rate across the board. Their rates are also different than those of Visa and MasterCard; they base their rates on the type of business, average ticket, and finally whether the transaction was completed through a swipe (customer physically swiped their card in your business) or whether it was manually entered by a representative of your company.

It is important that you understand how payment processing works from the time your customer swipes or inputs their data, all the way through to when you are paid for the transaction; so that you can fully understand the service you are paying for and what you are being charged for.

A transaction is made through a terminal or online software that will send the payment information to the credit card’s issuing bank, which is where the funds will be coming from. Once the payment has been verified and the payment is approved, it will take 24 hours for the payment to be processed before any funds are transferred. At the end of the processing period, each bank will settle with the merchant for the batch of transactions for the day.

Most processors break down Visa and MasterCard transactions into three categories:

• Qualified: A standard Visa or MasterCard is swiped through a terminal or mag reader and batched within 24 hours.

• Mid-qualified: A standard card is keyed into a terminal or software using AVS (an address-verification system), or a corporate card is swiped.

• Non-qualified: A standard card is keyed in without AVS, a corporate card is keyed in, or a transaction is not batched or settled in 24 hours.

Due to the increased risk, transactions that qualify as mid or non-qualified transactions are going to be the most expensive to process. American Express and Discover offer different rates than Visa and MasterCard and do not offer tiered rates for mid or non-qualified transactions. In other words, they charge you a single rate across the board. Their rates are also different than those of Visa and MasterCard; they base their rates on the type of business, average ticket, and finally whether the transaction was completed through a swipe (customer physically swiped their card in your business) or whether it was manually entered by a representative of your company.