what is straight pass through

It is when you, as a business, receive surcharges from Visa and MasterCard

at true bank cost

Let me explain…

With a merchant account there are two price points:

1. Your base discount rate

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

With a merchant account there are two price points:

2. Surcharges

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.

First let’s look at a typical merchant account without straight pass through…

Often called a "tiered rate" account.

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

Let’s define what these terms mean…

Base Discount Rate =

the rate for generic consumer cards that are present and swiped

Mid-Qualified Rate = the rate for swiped rewards cards

or generic consumer cards that are keyed in

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

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

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

So how much of a difference does straight pass through make?

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

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!

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

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

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

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

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

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

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

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

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%

Now it’s time for a quiz

Question #1When shopping for a merchant account, what price

point is more important?

A. Base Discountor

B. Surcharges

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.

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

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.

To get your very own straight pass through merchant account