In past articles I have covered the 3 tiers or rates at which you are charged by your card processor. Let’s briefly review those:

1. Qualified – this is the lowest tier and least expensive for you as a merchant. To be charged at this tier, the card must be swiped through your terminal. Moreover, it must be a personal credit or debit card, issued by a U.S. Bank.

2. Mid-Qualified – this is the normal tier at which personal cards are accepted if they have any sort of rewards program linked to them for the cardholder – cash back, airline miles, etc. This is also the tier at which business credit and debit cards are accepted. Those rewards programs cost the card issuers money and they cost that back to you, the merchant, in the theory that cardholders, anxious to rack up rewards points/airline miles, will use their cards more frequently and spend more with you.

3. Non-Qualified – this tier is used for higher-risk transactions, usually when the card is not present such as for mail, telephone and internet orders.

Now to the point of this article: there is a growing trend among some card processors to no longer process Mid-Qualified rewards cards and business cards at the Mid-Qualified tier! That’s right – they are “kicking” those cards up into the Non-Qualified tier and that means you will be charged at your highest rate for accepting those cards.

This is astonishing to many merchants I have met with. There is really no way, usually, to know if a personal credit card does or does not have a rewards program associated with it. But the statistic is, almost 70% of personal cards do now have a rewards program. That means you can expect almost 70%, on average, of personal credit cards you accept to NOT process at the Qualified rate, but at Mid-Qualified or even Non-Qualified rate! You are not permitted, under merchant rules, to decline to accept any card. You must accept the card and you only find out how the cards processed when you receive your merchant statement next month.

More and more statements I see have a dollar amount on the Qualified tier, and a dollar amount on the Non-Qualified tier, and “$ 0.00” at the Mid-Qualified tier. If you see this on your statement, you know you are unhappily utilizing a processor that is kicking rewards and corporate cards up to Non-Qualified tier, and costing you a lot of money.

While you can sometimes go to your processor and re-negotiate your tier rates downward a bit, you cannot ask them to change the tier at which they process the various types of cards. Your only choice at that point is to look for another processor, and make sure your new processor is not doing the same thing.

James Hussher is an account executive for a major bank card processor. James resides in Fort Lauderdale, Florida yet handles accounts on a national basis. You can reach James at 954.513.0762 or visit his site, Credit Card Merchant News .