How To Transfer Money From Credit Card To Bank Account Without Charges – In general, there are three major ways to send Money from Credit Card to Bank that is – 1.) Withdraw from ATM (Automatic Teller Machine); 2.) Transfer Using Paytm Bank (3% Charges) and Send Using Digital Wallets (0% Charges).
Now, before unveiling the super easy step by step guide in front of you about “How To Transfer Money From Credit Card To Bank Account Without Charges.”
Let’s just have a look at and check How Does a Credit Card work? Are you having trouble understanding your merchant account? Are you confused about the rates and fees and how you’re being charged?
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You don’t need to know every little detail about credit card processing, you just need to know enough to delegate the task to a provider that will take care of everything for you.
Nevertheless, it’s important to understand the fundamentals so that you can properly make a provider selection. In the next couple of minutes, we will discuss the merchant account transaction cycle and how it works. Interchange and its role in the process.
The two main pricing structures and how they compare to each other and at the end, I will give you a couple ideas on how to best select a provider that fits your needs.
Let’s look at the transaction cycle. First, the customer presents a card to the merchant for purchase of goods or services. After the card is swiped or entered into the point of sale software, the processor sends out for authorization through the payment processing network. The issuing bank approves or declines the transaction based on funds available.
The transaction is then passed through the electronic networks to the processor and the approval code is delivered to the point of sale device at the merchant location.
How To Transfer Money From Credit Card To Bank Account Without Charges
The issuing Bank then sends the money to the processing company to reimburse them for the purchase that was made.
This whole process is completed in just a matter of seconds. At the end of the day, the merchant will send out all of their transactions referred to as a batch.
To the processor for money to be deposited into the merchant bank account and finally, the issuing bank will send the cardholder bill for the purchase.
What is interchange and What role does it play. Interchange is schedule fees that determine the price for all credit card transactions.
There are hundreds of interchange levels and each is comprised of a set of qualification requirements. That must be met in order for a transaction to fall into a certain category.
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The two main qualification requirements are – 1: How the payment is accepted? Whether it’s face to face or over the phone for example.
And the second is the type of card that is used, whether it’s a consumer card or a business card, for example, individual rate categories are set by Visa and Master Card and the interchange scheduled fees are published and could potentially change two times per year.
This is important to remember since these changes can affect the cost of your merchant account. Here’s a sample of just one part of a schedule of fees published by Visa.
As you can see in the table below that there are thirteen rates and eight categories on this example alone. Again in any single transaction, just one of these rates are charged based on the qualification of the card that was presented.
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Let’s look at two main pricing models and the components of both of them. Most providers will offer the following price structures.
1. Tiered Pricing: Also known as bundled or bucket pricing. And the second is interchange Plus: Also known as cost-plus or pass-through pricing. In order to compare these two pricing models, let’s first look at how the two pricing structures are related.
First off, interchange costs are at the core of both pricing models. The fees for any given transaction are broken into two main categories. Interchange costs along with dues and assessments and processor cost dues and assessments are paid to the card networks which is Visa and Master Card.
And, are the same for everyone as our interchange costs. They are absolute and every processing company pays the same amount for interchange dues and assessments period.
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They cannot be changed or discounted for special situations or for any reason, so whether you are fortune 500 company processing billions of dollars each year or a hobby business with just a couple thousand dollars in volume, you pay the same fees.
From now on, when we refer to Interchange, it is assumed that dues and assessments are included since we understand that they are the same for everyone.
The processor cost is the one variable that differs from one processor to the next. And, is the only area open for negotiation in your search for a merchant account provider.
Here are both pricing models in detail. Your choices are tiered pricing or interchange plus. Tiered pricing takes hundreds of interchange categories and lumps them into bundles or buckets.
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The three common tiers are qualified, mid-qualified and non-qualified and as you can see from the chart, the rates increase as you move from qualified to non-qualified.
Each of these tiers is set and assigned a specific rate by the processing company and can vary from one provider to the next. In fact, they often do what is considered to be a qualified transaction with provider A might fall into a mid-qualified transaction with provider B.
Tier pricing sorts the hundreds of interchange categories and each tier is priced high enough to cover the average of all the rates and fees that fall under that tier. Interchange Plus pricing passes the actual interchange cost through to you. And, a small provider charge is charged in addition.
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Also, referred to as provider markup, this fee varies widely based on a variety of factors and can range from five basis points upto one point five per cent or even higher.
Here’s a sample transaction refer to the Visa Interchange chart that we looked at earlier, and let’s compare a single transaction at a qualified rate of one point seven nine under a tier based programme to an interchange plus pricing program with a processor costs of 20 basis points.
Assume the following for the transaction. The interchange cost is 1.65 per cent and 10-cent as the transaction fee and we will use a hundred dollar transaction as the sample dollar amount.
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Given those two variables, we know that the actual cost of the transaction is one dollar and seventy-five cents. For the interchange plus pricing model you have, a 20 basis points added to the one dollar and seventy-five cent actual cost.
Bringing the total to one dollar and 95 cents. For the tier based pricing model, you have that same base cost of one dollar and seventy five cents.
But in order to get the total cost for a tier-based pricing model, you simply multiply the hundred dollars times the 1.79 per cent rate assigned to that tier level. To get the dollar and seventy nine cent total cost.
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As you can see, interchange costs are as the core of each of these pricing models, and with any pricing model for that matter and are paid one way or another.
So in this example, you can see that with the interchange plus pricing model your total cost is one dollar ninety five cents compared to the one dollar and seventy nine cents with the tier based model.
In either example, you can see that only a small piece of the total fee is paid to the processor like most of the fee is sent back to the issuing bank.
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Provider costs are collected for the purpose of paying network fees and other general business costs such as administrative expenses associated with accountant servicing, application approval and costs related to licensing the electronic payment networks.
For each transaction, this same calculation is done depending on the pricing model that you are currently playing.
It’s widely assumed that interchange plus pricing is a better pricing model because it is said to have a true cost or a transparent pricing model. But, does not necessarily mean that it’s a lower overall cost.
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Variables such as average ticket and the number of transactions processed each month in addition to the pricing structure variables that we discussed already, determine, whether tear or interchange plus pricing is best for your company.
Merchant account pricing is not one-size fits all in the end, what matters the most is the total dollar amount and fees paid for accepting a certain dollar amount of credit card volume.
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