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The Difference Between Qualified, Mid-Qualified and Non-Qualified Credit Card Transactions

Written by: Drew Goldbaum

Article Overview: The three general categories under which a credit card transaction is approved at is often a very confusing topic for small business owners. This article aims to provide an explanation as to how and why transactions will be processed at the different qualification levels - Qualified, Mid-Qualified, and Non-Qualified for Retail, MOTO and Internet merchants.

The Difference Between Qualified, Mid-Qualified and Non-Qualified Credit Card Transactions

(Please note that the requirements explained below are subject to change)

Retail Merchants

In the realm of credit card processing a "Retail Merchant" is defined as a merchant who does over 70% of their transactions swiped through a credit card terminal at the point of sale/transaction.

Qualified Transaction (also referred to as the Swiped Rate)
- In general terms, this is the rate charged per each transaction when the card is physically swiped through a credit card terminal.

Qualified Transaction Conditions

* The credit/debit card is present at the time of the transaction, the card's full magnetic stripe is read by the terminal, and a signature is obtained from the cardholder at the time of the transaction.

*One electronic authorization request is made per transaction and the transaction/purchase date is equal to the authorization date. The authorization response data must also be included in the transaction settlement.

*The authorization transaction amount must match the settled (deposit) transaction amount.

*The card that is used is not a commercial (business) credit card

*The transaction must be authorized and settled under a standard retail industry code.

*The transaction must be electronically deposited (batch transmitted) no later than 1 day from transaction/purchase/authorization date.

Mid-Qualified Transaction
- In general terms this is the rate charged when a transaction is manually keyed-in using AVS - Address Verification Service (card #, expiration date, address, zip code and CVV code all match)

Mid-Qualified Transaction Conditions

*One or more of the Qualified conditions were not met

Non-Qualified Transaction
- In general terms this is the rate charged when manually keying-in a transaction without using AVS.

Non-Qualified Transaction Conditions
*One or more of the Qualified conditions were not met, or:

*The transaction was electronically deposited (batch transmitted) greater than 1 day from the authorization date, or:

*The card that was used was a commercial card without submitting the additional data (see Commercial Card section below), or:

*The transaction was not electronically authorized, or the authorization response data was not included in the transaction settlement.

Mail Order/Telephone Order (MOTO) Merchants and Internet (Card not Present) Merchant Accounts

In the realm of credit card processing a "Moto Merchant" is defined as a merchant who manually keys in over 50% of their transactions and an Internet Merchant is one who accepts transactions over the Internet via an E-Commerce store with an online gateway or who submits transactions manually through a Virtual Terminal.

Qualified Transaction Conditions (For MOTO/Internet merchants the Mid-Qualified Rate is essentially the Qualified rate as these merchants never swipe a credit card through a terminal)

*One electronic authorization request is made per transaction and the transaction date is equal to the shipping date. The authorization response data must also be included in the settled transaction.

*The authorization request message must include Address Verification Service (AVS), which verifies the street address and the zip code of the card holder. NOTE: The only way this happens is if your software is set up to do this, or, if you are using a terminal, then if you capture the AVS information at the time of keying in your transaction.

*The transaction/shipping date must be within 7 calendar days of authorization date.

*The settled transaction amount must equal the authorized amount.

*The settled transaction must include the business's customer service telephone number, order number, and total authorized amount.

*Additional data (sales tax and customer code) is required in the settled transaction on all commercial (business) cards at non-Travel & Entertainment (T&E) locations.

*The transaction is electronically deposited (batch transmitted) on or 1 day after authorization date.

Non-Qualified Transaction Conditions

*One or more of the Qualified or Partially Qualified conditions were not met, or:

*The transaction was electronically deposited (batch transmitted) greater than 1 day from transaction/shipping/authorization date, or:

*Commercial Card without the additional data (see Commercial Card section below), or:

*The VISA Infinite card was accepted, or:

*The transaction was not electronically authorized or the authorization response data was not included in the settled transaction.

Commercial Card Additional Data

Visa

*Purchasing cards: Sales Tax and Customer Code (supplied by cardholder at point of sale)

*Corporate and Business cards: Sales Tax

MasterCard

*Corporate Data Rate II (Purchasing cards): Sales Tax and customer Code (supplied by cardholder at point of sale)

*Corporate Data Rate II (Business and Corporate cards): Sales Tax

*International Corporate Purchasing Data Rate II: Sales Tax and Customer Code (supplied by cardholder at point of sale)

*The following information must also be provided: Merchant's Federal Tax ID; Merchant Incorporation Status; and Owner's full name if the merchant is a sole proprietor.

Related Articles
  Credit Card Processing Accounts
  Business Credit Cards versus Personal Credit Cards
  Credit Card Advance Financing
  Merchant Cash Advance
  Small Business Cash Advance - How Does it Work?

Article Tags: account, card, credit, ecommerce, merchant, midqualified, nonqualified, online, payments, processing, qualified, services



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