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 |
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