Merchant Account Downgrade Fee Explained:
What is a Downgrade Fee? In the credit card processing industry, a Downgrade Fee is a blanket term used to signify surcharges added to the “Qualified Discount Rate” of the processing fee. In particular, the “Mid-Qualified” and “Non-Qualified” surcharges are the most common Downgrade Fees. However, there is no standard on what a Downgrade Fee must be called, or how it can be applied, and the terminology can vary from provider to provider. Downgrade Fees are often the fees that merchants report as “hidden fees” because they are rarely disclosed before the merchant account activation. Downgrade Fees generally cost merchants an additional 1%-3% per transaction on top of the Qualified processing rate. The fee may be assessed for a variety of reasons including a customer’s card type, issuing bank, how the transaction is entered and other merchant actions. On average, more than 50% of a merchant’s credit card transactions experience Downgrade Fees when set up under the tier/bucket rate pricing model – which is the pricing model that most merchants receive. Downgrade Fees can be eliminated through proper negotiation prior to establishing a merchant account with a provider. To learn how to eliminate them from your processing costs, read Fee Sweep.
About Phillip Parker
Thank you for reading my review. I hope that it has helped you with your research.
Why I'm Qualified to Write About Credit Card Processing
I'm a former credit card processing sales director who left the industry to start my own a small business. From the time that I starting working in the merchant services industry to when I left to write about it, I've been on the pulse of payments for nearly 15 years. It didn't seem fair to keep this insider knowledge to myself, so built this website to help small business owners research which service providers to use and how to save money on rates and fees. I've reviewed hundreds of companies, read thousands of user reviews, and learned the pricing tricks of every provider. If you have questions about credit card processing, you can find the answers here. I can help you save money with your current merchant account or help you find a new one. Message me here to get started.
Get started right away! I've help businesses save $1,156,834 this year alone! Submit a recent statement and I'll take a look at it for free.
No Reviews Yet Leave Your Review Below