A Mid-Qualified rate is the percentage rate a merchant will be charged whenever they accept a credit card that doesn’t qualify for the lowest rate (the qualified rate). This could happen for several reasons, such as the card being keyed in manually or the card being a rewards or business card.
The mid-qualified rate is higher than the qualified rate but lower than the non-qualified rate. The qualified rate is usually the lowest rate and is charged for standard transactions, like swiping a regular card through a credit card terminal. The non-qualified rate is the highest rate and is charged for transactions that pose the most risk, like accepting a credit card over the phone or without any form of electronic verification.
The different rate tiers exist because transactions that pose a higher risk of fraud or chargebacks usually incur higher processing fees from the credit card networks. Therefore, the merchant service providers pass these costs on to the merchants.
It’s crucial for merchants to understand their rate structure and be aware of the circumstances that could cause a transaction to be categorized as mid-qualified or non-qualified.