A qualified merchant discount rate or qualified rate is a merchant discount rate charged to businesses which are deemed as low-risk. This is usually the lowest discount rate a business can qualify for, and allows the business to accept credit cards at a relatively low cost.
When a business accepts a payment via a third-party payment solution such as a credit card, debit card, mobile wallet, digital wallet or wire transfer service via a merchant acquirer – through a point of sale (POS) terminal or a online payment acceptance solution, for example – the business must pay fees to the merchant acquirer (such as Aduno or SIX Payment Services), the payment network (such as Visa, Mastercard or American Express), the payment processor and their card issuer (such as UBS, Viseca, Cembra Money Bank or Swisscard AECS).
The higher the merchant discount rate applicable to a merchant is, the higher the fees which the merchant must pay when they accept payments via a merchant acquirer will be. The qualified merchant discount rate is the lowest rate a business can be eligible for and incurs the lowest cost possible for the business from a specific merchant acquirer. The qualified rate typically applies to businesses which have a very low risk of chargebacks or fraudulent transactions, such as physical merchants which accept card-present transactions only.
Businesses which are not eligible for a merchant acquirer’s qualified rate because they pose a higher risk may be eligible for the mid-qualified merchant discount rate. The most expensive merchant discount rate – the non-qualified merchant discount rate – applies to businesses which pose a high risk of loss for merchant acquirers.