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Fees · Glossary

Downgrade

Also called: downgrade category

A downgrade is the reclassification of a transaction by the acquirer into a higher-cost interchange or pricing tier. Common causes: missing AVS, late batch settlement, foreign card, business-card transaction without Level 2 data. Downgrades raise the effective rate without changing the headline rate.

Why this matters to merchants

Downgradesits inside the broader system of U.S. payment processing economics that determine a merchant’s effective rate. Most operators encounter this term on their merchant statement without understanding what it controls, which is how the four hidden fees covered by our methodology slip past unnoticed.

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