Saturday, January 9, 2010

What is a Downgrade? How can I avoid them and save money?

People who accept credit card now or plan to in the future, should be aware of the various surcharges and markups that can occur. Some can be easily avoided ( i.e. Interchange plus pricing VS Tier Rate Pricing ) while others can not (i.e. higher risk cards are always more expensive to process). The question is: what is a downgrade? Can I avoid downgrades on my merchant account? Downgrades refer to a card that has a higher cost associated with it (i.e. reward or corporate cards). There are other things that can cause downgrades which are easily avoidable such as batching out within 24 hrs. If you fail to batch out within a 24 hr period, in most instances your rate will jump automatically to "non-qualified" status and you will pay the highest rate category for that card processed. An easy way to avoid this problem is to set your merchant account to "auto-batch". This will allow the merchant account to check and see if anything needs to be "batched out" and you can set up the time for the batch beforehand.

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