This question was asked by an attendee during the Proformative
A video of the webinar can be viewed here: https://www.proformative.com/resources/webinar-video-leveraging-analytics-manage-cost-credit-debit-card-payments
What is a credit card processing "transaction downgrade" and why does it happen? (Webinar Attendee Question)
Answers
A downgrade is a situation when a specific credit or debit card transaction receives a sub-optimal interchange rate. Reasons for downgrades vary based on whether a merchant is on tiered pricing versus interchange pass-through pricing.
For tiered merchants, a downgrade (non-qualified) could be simply accepting international cards or business cards, or not electronically authorizing a transaction.
For pass-through merchants, a downgrade could be due to not passing AVS (Address Verification System) or customer billing zip code for Visa key-entered transactions. Another example of a downgrade is not supplying sales
To identify the specific reasons for your downgrades, it would be helpful to look at your processing statement. Feel free to reach out to me...
Anand Goel
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Here is a simple example: If you key enter a card (vs. swiping) in a retail environment, it is downgraded. You pay more because there is a greater
Within key entry, the amount of information passed along may have an impact as well as Anand states. I'm more likely to have the right person with the right card in hand if I can key enter the code off the back of the card, billing zip/address (depending on the details of your merchant acceptance agreement).
I don't look at the business cards as a downgrade; they are just more expensive to accept (like AMEX). You're just being stuck with the bill for some rewards program and can do little to alter that. The above examples can be impacted by your behavior.
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