The Non-Qualified Rate is the most expensive of the fees charged in merchant service three-tier pricing schedules, the other two being “Qualified” and “Mid-Qualified”. Whether a credit card processing company prefers to call it a “Non-Qualified Downgrade Fee, “Non-Qualified Transaction Fee” or just plain “Non-Qual, it’s actually a surcharge, levied on specific type of cards, transactions, or merchant errors. What it means for the merchant is that he’s actually being charged two fees: the base fee (the “Qualified” rate) plus an average of 1.5% to 2.5% for the Non-Qualified Rate.
Certain of the transactions that will trigger the Non-Qualified Rate are specific such as processing a foreign card, a corporate card, or a card that accumulates reward points. Additionally, some merchant servicers use “Non-Qual” as a catch basin tier for cards that could not be identified properly during the processing of the transaction. Typing in a credit card number rather than swiping the card can also qualify for the higher rate, as can failure to close out a batch at the end of the day.
To learn everything you need to know about rates and advice about how to get the lowest fees from any provider, read “Fee Sweep: How to Get the Merchant Services You Need Without Getting Scammed.