The document discusses the differences between a regular "tiered rate" merchant account and a "straight pass through" merchant account. With a tiered account, businesses pay different discount rates and fees depending on the type of credit card used, such as rewards cards carrying higher rates. A straight pass through account passes surcharges directly from credit card companies to businesses, resulting in overall lower costs, as shown through examples comparing the two account types on various card transactions. The document encourages businesses to seek out providers offering transparent straight pass through accounts.

2. It is when you, as a business, receive surcharges from Visa and MasterCard at true bank cost

3. Let me explain …

4. With a merchant account there are two price points: 1. Your base discount rate

5. With a merchant account there are two price points: 1. Your base discount rate This is the rate for transactions when a normal consumer credit card is used

6. With a merchant account there are two price points: 2. Surcharges

7. With a merchant account there are two price points: 2. Surcharges These are added to the base discount rate on transactions where a rewards card, corporate card, etc. are used or when the credit card in not swiped.

8. First let’s look at a typical merchant account without straight pass through… Often called a " tiered rate " account.

9. Your merchant account would have fees like this… base discount rate of 1.89% and $.20 per transaction mid-qualification rate of 2.50% and $.30 per transaction and non-qualification rate of 3.20% and $.40 per transaction

10. Let’s define what these terms mean…

11. Base Discount Rate = the rate for generic consumer cards that are present and swiped

12. Mid-Qualified Rate = the rate for swiped rewards cards or generic consumer cards that are keyed in

13. Non-Qualified Rate = the rate for corporate and business cards or for any other type of transaction not meeting guidelines or transactions that were not batched in a timely manner

14. So let’s review those rates again… base discount rate is 1.89% and $.20 per transaction mid-qualification rate is 2.50% and $.30 per transaction and non-qualification rate is 3.20% and $.40 per transaction

15. Now let’s see how rates on a straight pass through account work base discount rate is 1.89% and $.20 per transaction + surcharges direct from Visa and MasterCard

16. So how much of a difference does straight pass through make?

17. EXAMPLE #1 Swiped Visa Rewards Card 2.50% + $.30 2.00% + $.20 Actual Rate (mid-qualification) .11% Visa Surcharge 1.89% + $.20 1.89% + $.20 Base Rate Regular Account SPT Account

18. EXAMPLE #1 Swiped Visa Rewards Card With a $100 purchase the straight pass through account fee would be $2.20; for the tiered account $2.80. So a straight pass through account would give you a .60% reduction on this type of card!

19. EXAMPLE #2 Keyed in, card not present Visa or MasterCard 2.50%+$.30 2.20%+.20 Actual Rate (mid-qualification) .31% Surcharge 1.89%+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

20. EXAMPLE #2 Keyed in, card not present Visa or MasterCard With a $100 purchase the straight pass through account fee would be $2.40; for the tiered account $2.80. So a straight pass through account would give you a .40% reduction on this type of card

21. EXAMPLE #3 Visa EIRF 3.20%+$.40 2.65%+$.20 Actual Rate (non-qualification) .76% Visa Surcharge 1.89%+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

22. EXAMPLE #3 Visa EIRF With a $100 purchase the straight pass through account fee would be $2.85; for the tiered account $3.60. So a straight pass through account would give you a .75% reduction on this type of card

23. EXAMPLE #4 Corporate Cards 3.20%+$.40 2.55 %+$.20 Actual Rate (non-qualification) .66% Visa Surcharge 1.89 %+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

24. EXAMPLE #4 Corporate Cards With a $100 purchase the straight pass through account fee would be $2.75; for the tiered account $3.60. So a straight pass through account would give you a .85% reduction on this type of card

25. EXAMPLE #5 MasterCard Check or Debit Card 1.89%+$.20 1.36%+$.25 Actual Rate -.53%+$.05 MC Surcharge 1.89%+$.20 1.89%+$.20 Base Rate Regular Account SPT Account

26. EXAMPLE #5 MasterCard Check or Debit Card No, the minus sign was not a mistake; with check cards you, as a business, are entitled to receive a rebate from both Visa and MasterCard. With a $100 purchase the straight pass through account fee would be $1.61; for the tiered account $2.09. So a straight pass through account would give you a .48% reduction on this type of card

27. Effective Rate Allows you to see what you are really paying for your merchant account. Here is an example: Total bank card Volume - $72,053.25 Total merchant account fees – $1942.52 Effective Rate: 2.695% Base Rate – 1.79%

28. Now it’s time for a quiz

29. Question #1 When shopping for a merchant account, what price point is more important? A. Base Discount or B. Surcharges

30. Answer: You need to pay attention to both price points. For years merchant account providers have made the focus the base discount rate and have made most of their profit on the surcharges. It is time for that to change.

31. Question #2 How can you make your merchant account straight pass through? A. Contact your current provider and renegotiate or B. Contact a new provider that will provide you with a straight pass through merchant account

32. Answer: Why would you contact your current provider if they have been hiding fees from you. Do they really deserve any more of your business? The answer is to go with a company that is transparent and only creates straight pass through merchant accounts.

33. To get your very own straight pass through merchant account