nterchange downgrades are quite common, but they are avoidable. It is in a business owne’s best interest to reduce downgrades as much as possible, and the first step to doing that is by understanding them. You can read our general article on interchange downgrades here. In this article, we are going to focus on MasterCard Standard Interchange Downgrades.

To understand these specific downgrades, you must know that Mastercard transactions are given a category code corresponding with an interchange rate, and these category codes are dependent upon the type of card used, the type of data captured, and the industry in which the purchase is being made.

The “Standard” category of interchange is the most basic form of interchange. That means that if a transaction doesn’t qualify for another, cheaper form of interchange, then it downgrades to the standard category. For example, if you are a business with level 3 processing doing business with another company and you fail to capture all the data required for the level 3 processing rate, then the transaction will downgrade to the more expensive level 1 or 2 processing rates. However, even if you don’t have level 3 processing, you can still downgrade to more expensive rates.

You can avoid being charged the standard rate by capturing AVS data and other data required by MasterCard in your industry and settling transactions on time. Your bottom line will thank you!

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