The term mid-qualified merchant discount rate or mid-qualified rate refers to a merchant discount rate charged by merchant acquirers for card payment processing transactions to businesses which have an average risk of fraudulent transactions or chargebacks.
This rate is higher than a qualified rate and often applies to businesses which accept card-not-present transactions via internet or over the telephone. It also applies to businesses in industries which historically have a high risk of payment disputes.
When a business accepts a card-based payment from a customer, the payment is settled via a merchant acquirer (such as SIX Payment Services or Aduno in Switzerland) which operates the point of sale (POS) terminal, a payment network (Visa, Mastercard, American Express) which operates the card network, a payments processor which determines whether the customer has a sufficient line of credit or private account balance to complete the transaction, and a card issuer which manages the account linked to the card. In exchange for the services provided, the merchant pays fees to all four of these service providers. Collectively, these fees are known as merchant fees and they are charged at the applicable merchant discount rate.
The higher the risk of a transaction being disputed by a cardholder, the higher the merchant discount rate which a business must pay when they accept a card-based transaction – including payments with mobile wallets linked to cards or otherwise accepted through a POS terminal powered by a merchant acquirer.
As a business, the higher the merchant discount rate you pay to accept a payment, the lower your profit margin on that sale is. For this reason, getting offers from multiple merchant acquirers and using the acquirer which offers the lowest merchant discount rate is recommended, as long as that acquirer provides the services which you need.