When credit card transactions "downgrade," it means that they failed to meet criteria for the "target" interchange category. In practical terms, it means your business paid more to process that transaction than was necessary. Non-qualified is a "downgrade" category. Note: "Standard" as an interchange category still applies in limited circumstances; specifically, Visa uses it for international commercial transactions. When a card issued outside the US is used at a US business, and that transaction fails to meet criteria for its target category, it will be charged at the Commercial Standard rate. See our article on Commercial Standard for more info.
A Note on Non-Qualified
Visa using the term "non-qualified" as an interchange category has muddied the waters a bit on processing statements. Previously, there was no "non-qualified" designation at the interchange level. Credit card processors using a tiered pricing system would often use their own "categories" - often called qualified, mid-qualified, and non-qualified. This was an indication of opaque, expensive pricing that left your business at the mercy of the processor. Now, with Visa's usage, non-qualified may be less insidious - but it still indicates a situation where you're paying more than you ahve to for credit card processing. If you're seeing a lot of "non-qualified" or "non-qual" on your processing statements, it's worth looking into.Corporate and Purchasing Non-Qualified Interchange Rate
Visa currently charges 2.95% + 10 cents per transaction for corporate and purchasing non-qualified. Interestingly, the card company has two categories for corporate and purchasing non-qualified: one called "non-qualified" and one called "non-qualified with data" though both have the same rate.Non-Qualified with Data
Commercial cards are eligible for better interchange rates if businesses provide extra data (called level 2 or level 3 data.) Providing such data isn't required, but can help businesses that take a lot of commercial cards pay less. However, as this category indicates, it's possible to provide enhanced data and still not meet the criteria to receive the preferred rates. The fact that this category exists tells you that you can both provided enhanced data and downgrade to a more expensive interchange category because you did not meet other requirements. If you're seeing a lot of "non-qualified" (or abbreviations) on your processing statements, it's worth checking options to see what you can do. Sign up for a free CardFellow account to quickly and privately compare real pricing from multiple processing companies or call us for assistance.
Ellen Cunningham
