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Credit Card Processing: What You Should Know About Downgrades

by Trisha Echols      Cherry, who owns a bridal gown boutique, secured a credit card processing service for her expanding business. She believed she had already negotiated for the lowest processing fee. But to her surprise, her first monthly credit card processing bill exceeded her expected budget. She hastily called the credit card processing company and demanded an explanation. A service agent replied that Cherry's card transactions suffered a downgrade.      What is a downgrade? Basically, a downgrade means that the company charged you a higher processing rate than what you signed for. There are a number of reasons for this. When left unchecked, this downgrade could eat up a substantial amount from your earnings. You see , downgrades are costly. . But before delving further, let's first look at a credit card transaction rate or qualified rate. QUALIFIED RATE a.) A customer enters your store and picks up items. He then proceeds to the checkout counter and hands you his standard credit card. ( Please note the word “ standard”). b.) As a merchant, you properly swipe the card. The card reader machine gets all the necessary card information, especially the customer’s signature. c.) Before you close shop in the evening, you complete credit card transaction batching procedure for the day      As you can see, the above procedure merits you a qualified discount rate. It's the lowest rate so far. And it's the rate you signed up for. But what happens when your card transaction misses any of the three important steps listed above? That's when a downgrade occurs. You will have to pay a higher discount rate. From a standard qualified discount rate, you will either be in mid-qualified, or non-qualified rate. MID-QUALIFIED RATE-- ( slightly costly that standard qualified rate). You will be charged with a mid-qualified rate under any of the following reason: a.) instead of swiping the card into the reader, you manually enter or “ key in “ the card information <ol> b.) you process a different credit card—maybe a Rewards, Business, or International card. c.) you do not batch your transaction at day's end.( within 24 hours)</ol> NON-QUALIFIED RATE--( more costly than mid-qualified rate) This rate will apply under any of the following condition:           a.) you manually enter card data without the AVS ( Address Verification Service) information            b.) the consumer uses a special type of card other than the standard consumer credit card <ol> c.) you manually key in card authorization into the terminal</ol> <ol> d.) you batch your transactions after two days or after an elapse of 48 hours.</ol>     Cherry, the bridal boutique owner, learned from this lesson . She no longer accepts or process any Rewards, Business, or Government-issued cards. Instead, she sticks to the standard consumer credit cards like Visa or Master cards. In addition, she makes sure that the consumer signatures are properly captured during the swiping process. Lastly, she batches all her credit card transactions at the close of the day.     Because Cherry strictly adheres to these procedures, her second monthly credit card processing bill showed a great improvement. The company charged her a lower processing fee. She significantly reduced costs and made considerable savings.     Like Cherry, you too can avoid costly downgrades in your credit card processing fees. Check your monthly bills from time to time. Monitor credit card transactions. Moreover, follow closely the procedures for a qualified discount rate. If you do, not only will you avoid extra charges and fees but gain significant revenues in the long run. ( Trisha Echols currently is a long-time financial consultant with established consultancy offices in Amsterdam, Halifax, Malaysia and other key cities. Her clients belong to the top 500 companies in England and in the United States. She does lectures on strategic business practices and also writes for various magazines on business matters).  <a href="http://www.onlywire.com/submit?u=http://www.creditcardprocessingexperts.com/credit_card_processing_what_you_should_know_about_downgrades.html;t=credit%20card%20processing;tags=credit%20card%20processing" target="_blank" title="Add this Article to Onlywire"><img src="http://www.onlywire.com/i/onlywire.ico" alt="" />Add to Onlywire!</a>

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