How to Avoid Downgrades Iowa

Written By: Lisah, Merchant Warehouse Customer Service

Whether you are currently accepting credit cards, or plan on doing so, it is important to know how to save money by avoiding downgrades whenever possible.

A downgrade simply means that you are being charged a rate increase because the type of card your customer is using has a higher processing cost or because a transaction was processed incorrectly by you, the merchant.

You can't always prevent downgrades from happening, but this article will show you what you can do to keep your transaction costs as low as possible.

As an example, for a Retail or "Swiped" Account where the customer is handing over their card for processing, a transaction will get the Qualified Discount Rate (lowest rate possible) only if the card is swiped, the cardholder is present, and the card is a standard consumer credit card. If any of these criteria are changed, the account will "downgrade" to either the "Mid" or "Non" qualified level. These levels are each associated with a greater cost of processing.

Here is a more detailed description of what can be done to avoid many downgrades, and also what happens if certain criteria are not met.

Retail/Card Swiped Accounts

Qualified Rate

The Qualified Discount Rate is charged when all of the following occur:

Standard consumer credit card is used

Card is swiped accurately and data properly obtained

The customer's signature is captured

The transaction is "Batched" or "Settled" within 24 hours

Mid-Qualified

The Partial/Mid Qualified rate will be applied when any of the following occur:

The card info is manually entered, or "keyed" & all AVS info is entered

The consumer uses a Rewards card

Transactions are not settled/batched within 24 hours

Non-Qualified

If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.

Card is manually entered with no AVS info entered

The consumer uses a Corporate, Government or International card

Authorization code is manually keyed in to your processing terminal.

Transactions are not settled/batched within 48 hours

Keyed "MOTO" or Internet Accounts

For these types of accounts, the merchant manually enters credit card information into a credit card terminal or software after the order is placed or is collected through an online payment gateway.

Qualified Rate

The Qualified Discount Rate is charged when all of the following occur:

Standard consumer credit cards are used

All required Credit Card information is entered including AVS (address verification) for VISAr transactions.

The transactions are "Batched" or "Settled" within 24 hours

The order/invoice Number entered

Mid-Qualified

For MOTO/Internet Accounts, rates usually fall directly to Non-Qualified, not mid-qualify, but these are the possible reasons why a merchant may be charged a Mid-Qualified Rate

AVS information is not entered

Transaction/Batch is not settled within 24 hours

Card is a Rewards or Business card

Non-Qualified

If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.

Any of the required card or transaction information is not entered

The consumer uses a Corporate, Government or International card

Authorization code is manually keyed in to your processing terminal.

Transactions are not settled/batched within 48 hours

As you can see, there are many factors involved in determining which rates are assessed to your transactions. Follow the tips above, and you will keep your processing rates as low as possible. A Merchant Warehouse representative is always available to answer any questions or concerns you may have.