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How do I avoid downgrades?

Avoiding downgrades ensures that you are paying the lowest possible transaction fees. A transaction can fall into one of three rate categories and processors charge a different fee depending on which category a transaction falls into. A transaction can fall into one of the following categories:

  • Qualified – lowest risk and lowest cost per transaction
  • Mid-qualified
  • Non-qualified – highest risk and highest cost per transaction

What is a downgrade?

A downgrade occurs when a transaction does not meet the low-risk criteria of the qualified category, and falls into either the mid-qualified category or non-qualified category. The following may affect the category of a transaction:

  • Type of card
  • Correct use of the card
  • Time between running the transaction and batching of that transaction

How to avoid downgrades on Card-Swiped accounts

You can sign up to a Card-Swiped account to accept card payments on your premises using a payment terminal that has EMV or swipe.

To avoid a downgrade on a transaction, the transaction must meet all the Qualified category conditions. If the transaction does not meet one or more of these conditions, the processor downgrades the transaction. The downgraded category that the transaction then falls into to depends on the following conditions:

Qualified (the transaction must meet all conditions in this column) Mid-qualified (if the transaction meets any of the conditions in this column) Non-qualified – (if the transaction meets any of the conditions in this column)
Card type Standard consumer credit card (not reward, corporate, government, or international) Rewards card Corporate, government, or international card
Card use The customer dips or swipes their card correctly, and their data is properly accessed.

Note: If there is a fault with the EMV chip, and the customer has to swipe their card, this is still classed as correct use.

You manually enter the customer’s card information including Address Verification Service (AVS) information. AVS information includes the correct full billing street number and zip code. You manually enter the customer’s card information but you do not include  Address Verification Service (AVS) information. AVS information includes the full billing address and zip code.
Transaction batching/settling time-frame Within 24 hours Over 24 hours Over 48 hours

Example downgrade scenarios for Card-Swiped accounts

Card type Card use Transaction batching/settling time Category
Scenario 1 Standard Correct 30 hours Mid-qualified
Scenario 2
Corporate Correct Within 48 hours Non-qualified
Scenario 3 Standard You manually enter card information with full AVS information 50 hours Non-qualified
Scenario 4 Rewards You enter card information without AVS information Within 24 hours Non-qualified
Scenario 5 Standard Correct Within 24 hours Qualified (no downgrade)

How to avoid downgrades on Keyed Accounts

You can sign up to a Keyed Account to accept card payments for Mail Order / Telephone Order (MOTO) transactions or Internet transactions. When a customer places an order, you must manually enter the card information into a payment terminal or software or capture the information through an online payment gateway.

To avoid a downgrade on a transaction, the transaction must meet all the Qualified category conditions. If the transaction does not meet one or more of these conditions, the processor downgrades the transaction. The downgraded category that the transaction then falls into to depends on the following conditions:

Qualified (the transaction must meet all conditions in this column) Mid-qualified (if the transaction meets any of the conditions in this column)1 Non-qualified – (if the transaction meets any of the conditions in this column
Card type Standard consumer credit card (not reward, corporate, government, or international) Rewards card2 Corporate, government, or international card
Card use You include AVS information. AVS information includes the full billing address and zip code. You include AVS information. AVS information includes the full billing address and zip code. You do not enter any of the required card or transaction information.
Transaction batching/settling time-frame Within 24 hours Over 24 hours Over 48 hours
Order number or invoice number Included Included Not included

1All AVS information and the order/invoice number must be included for mid-qualified transactions.

2For a rewards card to be classed as mid-qualified, the card must be used correctly, the transaction must be settled within 24 hours, and the order/invoice number must be included.

Example downgrade scenarios for Keyed Accounts

Card type Card use Order number or invoice number Transaction batching/settling time Category
Scenario 1 Standard Full AVS information included Included 30 hours Mid-qualified
Scenario 2 Standard Full AVS information included Not included Within 24 hours Non-qualified
Scenario 3 Corporate Full AVS included Included Within 24 hours Non-qualified
Scenario 4 Rewards Zip code not included Included Within 24 hours Non-qualified
Scenario 5 Standard Full AVS information included Included Within 24 hours Qualified

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