FAQ’s 1. What is a Qualified, Mid-Qualified, & Non-Qualified rate? How do they apply? Qualified, Mid-Qualified & Non-Qualified rates are how many companies price/group transactions. Qualified transactions are normal swiped transactions which meet all the qualifying criteria of VISA and Mastercard and will allow for the lowest rate possible. Mid and Non-Qualifying are transactions which are downgraded by VISA and MasterCard for one or more reasons. Some of the more frequent reasons are: keyed in entries, not closing out batches every night, rewards cards, and corporate cards, etc. VISA and Mastercard have dozens of rate structures and they are many times grouped into these three tierd pricing structures (Qualified, Mid-Qualified, Non-Qualified) 2. What is the difference between a Mid and Non-Qualified rate? Mid-qualified rates usually occur when the transaction is only missing one piece of information. Majority of hand-keyed cards will be mid-qualified due to the risk of human error; not closing the batch every night may cause transactions to become mid-qualified. Non-qualified rates occur when a transaction is missing more than one piece of data and or is a corporate card. Corporate cards for the most part do not carry a balance, therefore the rates are higher. One of the best ways to explain downgrades to a merchant is: “When the card is not swiped and you have to key it in, the system/computers do not know that the card is actually present and therefore there is a greater risk for fraud. That being said, there is a higher discount rate charged to offset the risk.” There are several different factors that play a part as to weather or not it will be a Mid or Non- Qualified transaction. All of this is determined by VISA & Mastercard, not Omega. 3. What is ERR and how does it work? ERR stands for “Enhanced Recovery Reduced”. This is the preferred method for writing rates. VISA and Mastercard have dozens of rates structures for each respective card. Instead of grouping all of the rate structures into three buckets (Qual, Mid-Qual & Non- Qual, ERR actually allows for the exact interchange to be charged. This will save the merchant money and allows Omega to not have to adjust rates as often due to the interchange being passed on to the merchant. Example: A merchant has a CPS/retail interchange of 1.54% with a Qualified rate of 1.75% and an ERR rate of .80%. They conduct a transaction which actually qualifies as Visa Rewards 2, which is a 1.90% interchange and would be a non-qualified transaction in a three tierd pricing (3.5% - 4.0%). The merchant is charged the qualified rate of 1.75% plus the difference in interchange (1.90% - 1.54% = .36%) plus the .80% ERR rate. Making the total charge to the merchant, 1.75% + .36% +.80% = 2.91%. In definition, ERR is the difference between interchanges from qualifying fees classes plus the ERR rate on top of the original qualified rate. 4. What is a transaction fee? A transaction fee is the cost of running a sale through the Visa/MC systems. A customer is charged a transaction fee every time a sale is conducted. 5. What is a monthly minimum? A monthly minimum is the amount in total fees the merchant needs to acquire each month. Example: If a merchant’s monthly minimum is $25.00 and his monthly fees add up to be $14.00, an additional $11.00 will be added in order to meet the monthly minimum. Everything excluding the Statement fee applies toward the monthly minimum. 6. What is a batch fees? A batch fee is the charge for closing out the terminal and processing all the transactions at the end of the day. 7. What is a chargeback? A chargeback is when a customer disputes a charge their bill. The merchant will then be asked to provide a copy of the signed receipt and possibly a carbon imprint of the card and fax it in. If the merchant doesn’t have any proof of purchase with the customer’s signature, the funds will normally be credited back to the customer and the merchant will be charged a fee. All final decisions of the chargeback’s are left up to the issuing bank. In many cases chargeback disputes are handled without the merchant ever having to deal with them. 8. What is an AVS fee? An AVS (Address Verification Service) fee is an extra fraud and chargeback prevention method being used. As of now it is optional for the merchants, but may be required in the future. The AVS fee is applied when a merchant hand keys a transaction, the terminal is programmed to prompt for the customer’s zip codes & other information which gives more credibility to the transaction, helps prevent fraud and reduces the risk for the merchant getting downgrade charges. 9. What is a bundled rate and how is one calculated? A bundled rate is a way calculating rates w/o a transaction fees. This gives you a good selling tool when quoting rates to a merchant that doesn’t want a transaction fee. A bundled rate is calculated by using the following formula. (Transaction Fee / Average Ticket + Discount Rate) Always give a low estimate on the average ticket and look at previous statements before quoting bundled rates. Below is an example a bundled rate. 1.73% and $.20/transaction with an average ticket of $35.00 Bundled Rate Transaction Fee / Average Sale + Discount Rate = Bundled Rate $.20 / $35 + 1.73% = 2.30% 10. Is leased equipment handled through Omega? No, all equipment leasing is done through separate companies (Mostly FDR/Global Leasing). The lease amount will be deducted every month form the merchant’s checking account and will not show up on the merchant’s processing statement from Omega. All leases are separate from processing and have to be either bought out, returned, or continue making monthly payments on month to month bases after the lease has matured. 11. What is the difference between Telecheck’s check guarantee and check conversion? Telecheck offers a variety of check services. One is check guarantee. Check guarantee is when a check is run through a reader or the information is keyed into the terminal and the terminal gives the merchant an authorization code to write on the check. The merchant then would deposit the check as normal and would be required to fill out a form and send it to Telecheck in ordered to be refund for any check that did not clear (usually within 5 business days) that was given an authorization code. Check conversion is the process of converting checks into electronic transactions. The merchant would run the check through a terminal (Eclipse) and the terminal makes a photocopy of the check and deposits the funds as if it were an ATM card. There is no need to deposit the paper check. Although there are occasions where checks will not convert and the merchant has to deposit them. 12. What is MOTO (Mail order Telephone Order)? MOTO is when a merchant accepts bankcards primarily over the phone and/or through the mail. The rate for these types of business is higher due to the fact the card holder is not present and it is at higher risk for fraud. 13. What is ETC Touchtone? ETC touchtone is when a merchant processes cards without a terminal by calling in the information over the phone and getting an authorization. The merchant then uses a manual imprinter for a receipt. The cardholder may be present but it is higher risk due to the nature of the method of processing.