The qualified rate is the lowest processing rate in a tiered pricing model. It applies to transactions that meet all of the processor's "qualification" criteria — typically basic consumer credit cards swiped in person by the merchant.
In tiered pricing, processors group the hundreds of interchange categories into three buckets: 1. **Qualified** (lowest rate): Basic consumer credit cards, swiped in person, settled within 24 hours 2. **Mid-qualified** (medium rate): Slightly more complex transactions — rewards cards swiped in person, keyed-in transactions 3. **Non-qualified** (highest rate): Complex cards (corporate, business, rewards), card-not-present, delayed settlement
Typical tiered rate examples: - Qualified: 1.69% + $0.25 - Mid-qualified: 2.69% + $0.25 - Non-qualified: 3.49% + $0.25
The problem with tiered pricing: the processor decides which tier each transaction falls into. Merchants have little visibility or control. The criteria for "qualified" status varies by processor and is not publicly standardized.
Many merchants on tiered pricing assume most of their transactions are "qualified" but are shocked to find that the majority land in mid-qualified or non-qualified because their customers use rewards cards, corporate cards, or because their sales are card-not-present.
Under interchange plus pricing, the concept of qualified/non-qualified tiers disappears — each transaction pays the actual interchange rate plus a fixed markup.
Merchants on tiered pricing often overestimate how many transactions qualify for the qualified rate. If your customers frequently use rewards cards (extremely common), business credit cards, or your business takes keyed-in payments, expect a significant portion of transactions to be non-qualified.
A restaurant with mostly consumer credit card customers might see 60-70% qualify for the qualified rate. An e-commerce business taking card-not-present transactions might see 0-20% qualify — with the rest in the much-higher non-qualified category.
A retail store on tiered pricing (qualified: 1.79%, mid-qual: 2.79%, non-qual: 3.59%): - Month's transactions: $50,000 total - 30% qualified (basic consumer swiped): $15,000 × 1.79% = $268.50 - 40% mid-qualified (rewards cards swiped): $20,000 × 2.79% = $558 - 30% non-qualified (corporate, rewards CNP): $15,000 × 3.59% = $538.50 - Total processing fees: $1,365 - Equivalent under interchange plus (avg. 2.1% effective): $1,050 - Monthly overcharge from tiered pricing: $315
Qualification criteria vary by processor but typically include: basic consumer credit card (not rewards or corporate), card physically present and swiped, transaction settled within 24 hours, and required authorization fields provided.
No — the qualified rate is often a 'teaser' rate. The more meaningful comparison is your actual effective rate across all transaction types, or the non-qualified rate where most of your transactions may land.
Liberty Bancard doesn't use qualified/mid-qualified/non-qualified tiered pricing. We pass through actual interchange rates transparently. Upload your statement to see how much you're losing to non-qualified rate downgrades.
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.