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Why Qualified and Non-Qualified Cards Have Different Processing Rates

Companies that accept credit (and debit) cards for their transactions receive credit card processing accounts so that they can do so. However each card processing company has its own set of rules regarding the specific information about customers that holders of merchant accounts must obtain and the verification of their identities. Those credit cards that conform to these rules are said to be qualified; all others are non-qualified and have different processing rates from qualifying cards. All credit card transactions carried out otherwise than face-to-face, whether by phone or online, are also considered to be non-qualified regardless of whether the card itself is qualified. Some of the reasons for this will be explained below.

Credit card fraud

The fraudulent use of credit cards is one of the major problems that the business world has to face. Thieves steal people’s credit card information and use it to make purchases for themselves. They might also steal their whole identities and use them to open credit card accounts for which their victims are on the hook. Whatever the case, credit card processing companies as well as card owners must bear the burden of such fraudulent activity. To guard against such dangers, card processing companies must charge more than they normally would or else collect a fee for special protection.

Noncollectable accounts

Another problem with credit card accounts is that customers may default on their payments and thus render them noncollectable. Card processors have to charge an extra fee to provide protect against such “bad debts.”

Which cards are qualified and which ones are not?

General purposes cards such as those issued by the major companies are almost always qualified. Those that have been created for special purposes, such as business and rewards cards, are almost never so. Payment made on credit cards of any kind can also be considered non-qualified if the holders of the merchant accounts violate the rules of the processor, e. g. if the signature was not obtained or the data was not properly handled. This is likewise true if security requirements were not met, which is why online and phone transactions are non-qualified: They do not require the signature of the customer.


Credit card merchants know that they will have to pay extra for non-qualified cards or transactions. That is why they try to stay as much within the rules as possible.

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