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.

Visa: Playing Card Games with Merchants?

The NYT has an interesting article on how Visa seems to be playing a game with merchants in regards to how it can obtain higher fees. Especially for larger retailers, pin based debit fees are lower than signed debit fees. Visa is promoting the use of signed debit (i.e. with chase offering  a "pay your bill" sweepstakes) through banks and other efforts. This pushes up fees for retailers and it's interesting to note that: The Justice Department is investigating if rules imposed by payment networks, including Visa, on merchants regarding “various payment forms” are anticompetitive, a spokeswoman said. Several bills have been introduced in Congress seeking to give merchants more ability to negotiate interchange, which is largely unregulated. Large retailers are steering customers to use only pin based debit by prompting them to use their pin after they swipe their debit cards. Visa seems to have a real hold on the industry as it increases it's domination over rhe debit card market and raises it's fees. It is a real cause for concern for retailers.....