Editor's Note: In 2021, Visa introduced a legitimate classifications of 'Non-Qualified Consumer Credit' and 'Non-Qualified Commercial Credit.' However, if you see Non-Qualified for other card types (Mastercard, Discover, Amex) it is still considered a hidden mark up fee.
When this series first launched, we knew we’d be sharing information that was news to most and familiar to others. While some of the unethical fees came as no surprise, we never expected to come across a made-up fee. In part 13 of this series, we discuss a fake fee: Non-Qualified Interchange.
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Tiered vs. Interchange-Plus Pricing: Recap
Tiered pricing bundles transactions into three rate categories: Qualified, Mid-Qualified and Non-Qualified. The level of risk or reward associated with the transaction affects which tier it falls into. Qualified transactions are cheapest, whereas Non-Qualified are the most expensive. Tiered pricing isn’t regulated, meaning there is no set threshold to trigger different rate tiers — providers are free to shift rate tiers or allow downgrades to occur.
In contrast to Tiered pricing, Interchange-plus pricing consists only of the Interchange, or wholesale cost, to run a transaction plus the provider's markup. Transactions don't fall into unregulated tiers, so it’s more transparent.
Despite its intended transparency, providers still sneak unethical fees into Interchange-plus rate plans. The overwhelming detail in merchant statements makes this incredibly easy.
With Tiered pricing, the sales volume is typically listed along with the rate tier it qualified for. The rate listed per tier is a combination of the Interchange cost and markup, which isn’t itemized.
With Interchange-plus pricing, you’ll receive an itemized merchant statement listing the Interchange rate and markup separately; transactions don’t fall into tiers. In addition to the rate breakdown, statements also list many other fees, such as dues and assessments, and monthly fees.
Unfortunately, some providers use the complexity of merchant statements to their advantage, and add a fee called Non-Qualified Interchange. This fee does not exist; there is no such thing as a transaction on Interchange-plus being Non-Qualified. These providers are simply using industry terms to pad their wallets with the assumption that you won’t notice.
If you’ve seen Non-Qualified Interchange listed on your merchant statements – or any questionable fee, really – we highly recommend getting a statement analysis to determine the total cost of fees you’re unnecessarily paying your current provider. With the number of unethical fees out there, it’s likely you’re paying more than you should be.
Surprised by this fake fee? Have you ever seen a fee on your statement and wondered what it was actually for? Let us know below, you may have uncovered a new unethical fee!