Download - What Is Straight Pass Through
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It is when you, as a business, receive surcharges from Visa and MasterCard
at true bank cost
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Let me explain…
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With a merchant account there are two price points:
1. Your base discount rate
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With a merchant account there are two price points:
1. Your base discount rateThis is the rate for transactions
when a normal consumer credit card is used
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With a merchant account there are two price points:
2. Surcharges
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With a merchant account there are two price points:
2. SurchargesThese are added to the base discount rate on transactions
where a rewards card, corporate card, etc. are used or when the credit card in not swiped.
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First let’s look at a typical merchant account without straight pass through…
Often called a "tiered rate" account.
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Your merchant account would have fees like this…base discount rate of 1.89% and $.20 per transaction
mid-qualification rate of 2.50% and $.30 per transactionand
non-qualification rate of 3.20% and $.40 per transaction
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Let’s define what these terms mean…
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Base Discount Rate =
the rate for generic consumer cards that are present and swiped
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Mid-Qualified Rate = the rate for swiped rewards cards
or generic consumer cards that are keyed in
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Non-Qualified Rate = the rate for corporate and business cards
orfor any other type of transaction not meeting guidelines
or transactions that were not batched in a timely manner
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So let’s review those rates again…
base discount rate is 1.89% and $.20 per transactionmid-qualification rate is 2.50% and $.30 per transaction
andnon-qualification rate is 3.20% and $.40 per transaction
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Now let’s see how rates on a straight pass through account work
base discount rate is 1.89% and $.20 per transaction
+surcharges direct from Visa and MasterCard
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So how much of a difference does straight pass through make?
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EXAMPLE #1Swiped Visa Rewards Card
SPT Account Regular AccountBase Rate 1.89% + $.20 1.89% + $.20
Visa Surcharge .11% (mid-qualification)
Actual Rate 2.00% + $.20 2.50% + $.30
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EXAMPLE #1Swiped Visa Rewards Card
With a $100 purchase the straight pass through account fee would be $2.20; for the tiered account $2.80.
So a straight pass through account would give you a .60% reduction on this type of card!
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EXAMPLE #2Keyed in, card not present Visa or MasterCard
SPT Account Regular AccountBase Rate 1.89%+$.20 1.89%+$.20
Surcharge .31% (mid-qualification)
Actual Rate 2.20%+.20 2.50%+$.30
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EXAMPLE #2Keyed in, card not present Visa or MasterCard
With a $100 purchase the straight pass through account fee would be $2.40; for the tiered account $2.80.
So a straight pass through account would give you a .40% reduction on this type of card
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EXAMPLE #3Visa EIRF
SPT Account Regular AccountBase Rate 1.89%+$.20 1.89%+$.20
Visa Surcharge .76% (non-qualification)
Actual Rate 2.65%+$.20 3.20%+$.40
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EXAMPLE #3Visa EIRF
With a $100 purchase the straight pass through account fee would be $2.85; for the tiered account $3.60.
So a straight pass through account would give you a .75% reduction on this type of card
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EXAMPLE #4Corporate Cards
SPT Account Regular AccountBase Rate 1.89%+$.20 1.89 %+$.20
Visa Surcharge .66% (non-qualification)
Actual Rate 2.55 %+$.20 3.20%+$.40
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EXAMPLE #4Corporate Cards
With a $100 purchase the straight pass through account fee would be $2.75; for the tiered account $3.60.
So a straight pass through account would give you a .85% reduction on this type of card
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EXAMPLE #5MasterCard Check or Debit Card
SPT Account Regular AccountBase Rate 1.89%+$.20 1.89%+$.20
MC Surcharge -.53%+$.05
Actual Rate 1.36%+$.25 1.89%+$.20
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EXAMPLE #5MasterCard Check or Debit Card
No, the minus sign was not a mistake; with check cards you, as a business, are entitled to receive a rebate from both Visa and MasterCard.
With a $100 purchase the straight pass through account fee would be $1.61; for the tiered account $2.09.
So a straight pass through account would give you a .48% reduction on this type of card
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Effective RateAllows you to see what you are really paying for your merchant
account.
Here is an example:
Total bank card Volume - $72,053.25Total merchant account fees – $1942.52
Effective Rate: 2.695%Base Rate – 1.79%
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Now it’s time for a quiz
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Question #1When shopping for a merchant account, what price
point is more important?
A. Base Discountor
B. Surcharges
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Answer:
You need to pay attention to both price points.
For years merchant account providers have made the focus the base discount rate and have made most of their profit on the
surcharges.
It is time for that to change.
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Question #2How can you make your merchant account
straight pass through?
A. Contact your current provider and renegotiateor
B. Contact a new provider that will provide you with a straight pass through merchant account
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Answer:
Why would you contact your current provider if they have been hiding fees from you. Do they really deserve any more of your
business?
The answer is to go with a company that is transparent and only creates straight pass through merchant accounts.
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To get your very own straight pass through merchant account