The non-qualified rate (or "non-qual") is the highest rate tier in tiered pricing models. Transactions that don't meet "qualified" or "mid-qualified" criteria fall into this expensive bucket. The non-qualified rate typically applies to:
- Business credit cards and corporate purchase cards - Premium rewards cards (high-tier travel, luxury cards) - Government and purchasing cards - Card-not-present transactions (phone orders, online) - International cards - Transactions with missing or failed address verification (AVS) - Transactions settled more than 24-48 hours after authorization - Transactions where CVV was not captured or failed
The non-qualified rate is the most profitable tier for processors. A non-qualified surcharge of 1.5-2.0% on top of the qualified rate creates enormous margin. Merchants on tiered pricing often don't realize that 30-60% of their transactions may be non-qualified.
Common non-qualified surcharge amounts: $0.25–$0.50 per transaction plus 1.0%–2.5% above the qualified rate.
The opacity of tiered pricing means merchants can't easily dispute non-qualified designations. Processors set their own criteria, and these criteria are rarely disclosed clearly in merchant agreements.
The non-qualified rate is where merchants overpay the most on tiered pricing. For any business accepting corporate cards, e-commerce transactions, or keyed-in payments, non-qualified rates may apply to a majority of transactions.
Example: An HVAC company that bills corporate clients to company credit cards might see 70-80% of their volume hit non-qualified rates — potentially paying 3.5% or more on transactions where the actual interchange cost is 2.5%.
B2B distributor on tiered pricing: - 80% of sales to businesses paid with corporate Visa cards (non-qualified) - Non-qualified rate: 3.49% + $0.25 - Actual interchange for commercial Visa card (level 2 data provided): 1.90% + $0.10 - On a $1,000 corporate card transaction: - Tiered (non-qualified): $34.90 + $0.25 = $35.15 - Interchange plus (level 2): $19.00 + $0.10 + 0.30% markup = $22.10 - Overpayment per transaction: $13.05 - At 100 transactions/month: $1,305/month overpayment → $15,660/year
If your customers use corporate cards, rewards cards, or pay online, those transactions naturally land in non-qualified under tiered pricing. The non-qualified designation is largely based on card type and transaction method, not anything you're doing wrong.
Switch to interchange plus pricing, which eliminates tiered categories. Alternatively, ensure you're providing complete transaction data (AVS, CVV, level 2/3 data) to minimize downgrades.
Liberty Bancard doesn't have a non-qualified rate bucket. Under interchange plus pricing, your corporate card transactions pay actual commercial interchange rates — not an inflated non-qualified tier. Upload your statement to see exactly how much you're losing to non-qualified surcharges.
Continue learning: Browse all 60 payment processing terms in our Payment Processing Glossary, or upload your statement for a free analysis of your current processing costs.