The terms “basis point” in reference to credit card processing and merchant accounts is used to refer to the percentage of a sale that a business pays their service provider to process a credit card transaction.
Basis points sound a lot more complicated than they really are. Simply put, basis points are 1/100th of 1 percent or 0.01% and they’re used specifically when referring to the discount rate that a merchant pays to process credit cards.
For example, a typical three-tier merchant account could have a qualified rate 1.69% or 169 basis points, a mid-qualified surcharge or 30 basis points or .3% and a non-qualified surcharge of 100 basis points or 1%. A merchant account with more direct interchange plus pricing could have a discount charge of 33 basis points or .33% over interchange.