Fee Terms Made Easy

June 9, 2015

moneris-fee-terms-definitions

Key Definitions:

Merchant Discount Rate (MDR)

Is the amount a merchant is charged for processing transactions. MDR is impacted by several cost components including interchange, assessments, processing, settlement and reporting fees. This means your MDR could include Qualified Fees, Non-Qualified Fees and Interchange Differential Fees.

Interchange Rate

Is the amount that card processors – in this case, Moneris Solutions – are required to pay credit card issuers/financial institutions for each credit card transaction. Interchange rates are set and regulated by the card brands (i.e. Visa and MasterCard).

Target Qualification

Is the Interchange Rate that is expected (or ‘targeted’) to be applied to your transactions. This is what determines a qualified transaction versus a non-qualified transaction. It is typically set at the Consumer Electronic Interchange Rate for each card brand (i.e. Visa and MasterCard). Your MDR is based on the assumption that your transactions will satisfy the criteria, established by the card brands, to meet the Target Qualification Level.

Level Qualified Fee

A qualified fee is the base rate applied to all transactions. A transaction with an Interchange Rate that is equal to or below your Target Qualification Level is considered a qualified transaction. For qualified transactions, a Qualified Fee will be the only fee applied.

Non-Qualified Fee

A non-qualified fee is applied in addition to the Qualified Fee for non-qualified transactions and compensates for higher costs and risks associated with these transactions. A transaction with an Interchange Rate that is higher than your Target Qualification Level is considered a non-qualified transaction and is subject to a Qualified Fee, a Non-Qualified Fee and an Interchange Differential Fee. (Examples of non-qualified transactions are manually key entered transactions, corporate card transactions, premium card transactions and card not present transactions.)

Interchange Differential Fee

An interchange differential fee is applied in addition to the Qualified and Non-Qualified Fees for non-qualified transactions and compensates for higher costs and risks associated with these transactions. A transaction with an Interchange Rate that is higher than your Target Qualification Level is considered a non-qualified transaction and is subject to a Qualified Fee, a Non-Qualified Fee and an Interchange Differential Fee. The Interchange Differential Fee is equal to the difference between the Interchange Rate associated with your Target Qualification Level and the Interchange Rate associated with the non-qualified transaction. (Examples of non-qualified transactions are manually key entered transactions, corporate card transactions, premium card transactions and card not present transactions.)

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