Credit Card Downgrades


Credit card transaction downgrades cost businesses a significant amount of money every year and make the issuing banks that much more. Many of these downgrades can be avoided by simply understanding how they happen and tightening up operations.


Each card transaction is tagged to the interchange category with the lowest fees based on the transaction type. When certain events happen that no longer qualify the transaction to that interchange category it is routed to a costlier one.


Batch out daily – Interchange categories set time frames on how quickly authorizations must settle (usually within 24 hours). If you miss this cut-off, the entire batch will downgrade.

Stop manual entering card numbers – Every time you manually enter a credit card number (instead of swiping/using chip) it downgrades.

Use Address Verification – If due to your business type you must manually enter card numbers or accept online payments, make sure you are requesting the customer’s billing zip code. If you do, no downgrade.

Use CVV – Just like Address Verification, entering the card’s 3-digit (4-digits for American Express) card verification value will prevent a downgrade.


From the issuing banks’ standpoint, the riskier the transaction the bigger the downgrade (Hint: an in-person EMV transaction vs. someone giving your card number over the phone). Make sure your equipment works, that you have AVS and CVV functionality, you are auto-batching, and your employees are trained. If you do these four things you will optimize your interchange rates.

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