Non Qualified Rate

Non-Qualified Rate

A non-qualified rate is a tier of classification used by credit card payment processors to categorize transactions under a tiered pricing structure. 

Tiered pricing is one type of pricing structure available in credit card payment processing. 

Under tiered pricing, each transaction is routed by the payment processors into different levels or tiers. Each tier has its own rate for processing costs.

Typically, there are three rate levels or tiers:

• Qualified
• Mid-Qualified
• Non-Qualified 

Which Transactions Fall into Each Tier? 

Payment processors set the levels of classification and determine what factors are used to classify the transactions. There are, however, some generalizations between the processing companies that are relatively consistent.

Qualified Rate 

The qualified rate tier is the most favorable. These are the lowest possible rates a business will pay for processing, however, it is important to keep in mind that not all transactions will fall into this category. 

Qualified transactions are typically consumer non-rewards credit cards and debit cards. These are also transactions where the card is physically present. 

Mid-Qualified Rate 

A mid-qualified rate is in between qualified and non-qualified. It is an increase in rate compared to qualified but it is still a better rate than non-qualified.

Examples of payment types that might fall into this tier are swiped rewards credit cards and manually entered (keyed-in) cards. 

Mid-qualified rates may make up the bulk of e-commerce transactions since the card is not present. 

Non-Qualified Rate 

This is the least favorable tier for transactions to fall into. It will be subject to the highest processing rates. 

Examples of payments that would be classified as non-qualified are those made with business credit cards and high rewards cards. 

Also, card-not-present transactions where the customer billing information is not confirmed with a verification process may also fall into this tier since there is a higher risk of fraud. 

Key Takeaway 

A credit card processor can change the tier system used to classify transactions and determine rates without notice. If you are considering a processing account that uses a tiered pricing model, be sure to be aware of which tiers your transactions fall into most often.