How do I avoid downgrades?

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. The three categories are:

  • 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

Modified on: Tue, 13 Nov, 2018 at 8:32 AM