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Cayan Credit Card Downgrades

Overview

When processing using credit cards some of your transactions could be downgraded. This article explains why those downgrades occur.

Why So Complicated?

Merchant account providers, such as Cayan, previously known as Merchant Warehouse, are charged a fee to process credit cards from credit card providers such as Visa, American Express, Mastercard, etc. As a convenience for you most merchant account providers simplify those fees into 2 main categories. Those two categories are Retail/Card Swiped Accounts and  Mail Order/Telephone Order/Internet Accounts. Or, in layman's terms, was the physical credit card swiped across a terminal or was the credit card number typed in. From those two categories the merchant account then simplifies it into three main sub-categories of Qualified, Mid-Qualified, and Non-Qualified. Essentially, the merchant account provider groups credit cards transactions that fit into a range of fees into one of those three categories. It may make more sense to conceptually think of the categories as follows

  • Qualified is the same as low credit card fees charged to the merchant account provider
  • Mid-Qualified is the same as medium level credit card fees charged to the merchant account provider
  • Non-Qualified is the same as high level credit card fees charged to the merchant account  provider

The merchant account provider does this for your convenience. On their side they are actually dealing with some extremely complicated fees. For example, VISA charges over 65 different transaction fees depending on the type of card, what was purchased, as well as other factors. American Express and Mastercard have a completely different transaction fee structure which is just as complicated if not more so.

If you would like to review some of the credit card company fees you can go to the links below.

When Are Credit Card Transactions Downgraded

The following link, provided by Merchant Warehouse, explains when transactions are downgraded. http://merchantwarehouse.com/credit-card-processing/avoid-downgrades

Below we have copied and pasted some of the information from the above link and added additional comments. Please note that the information could change and that you should refer to the link above for the most accurate information. In addition, we have learned that the categories are not absolute. For example, if a reward card has a higher fee then usual because it is giving out higher rewards then a typical reward card it can be moved from the Mid-Qualified category to the Non-Qualified category. Please refer to the reward card info at the bottom of the page for more information.

Retail/Card Swiped Accounts

  • Qualified Rate
    • The Qualified Discount Rate is charged when all of the following occur:
      • Standard consumer credit card is used
      • Card is swiped accurately and data properly obtained
      • The customer’s signature is captured
      • The transaction is “Batched” or “Settled” within 24 hours. (This could occur when auto-batch is not turned on for your Cayan account)
  • Mid-Qualified
    • The Partial/Mid Qualified rate will be applied when any of the following occur:
      • The card info is manually entered, or “keyed” & all AVS info is entered
      • The consumer uses a Rewards card (Review Details Below Regarding Reward Cards)
      • Transactions are not settled/batched within 24 hours . (This could occur when auto-batch is not turned on for your Cayan account)
  • Non-Qualified
    • If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.
      • Card is manually entered with no AVS info entered. (StudioCloud asks you if you really want to process the credit card without this information)
      • The consumer uses a Corporate, Government or International card  (Review Details Below Regarding Reward Cards)
      • Authorization code is manually keyed in to your processing terminal.
      • Transactions are not settled/batched within 48 hours.  (This could occur when auto-batch is not turned on for your Cayan account)

Keyed “MOTO” or Internet Accounts

For these types of accounts, the merchant manually enters credit card information into a credit card terminal or software after the order is placed or is collected through an online payment gateway.

  • Qualified Rate
    • The Qualified Discount Rate is charged when all of the following occur:
      • Standard consumer credit cards are used
      • All required Credit Card information is entered including AVS (address verification) for VISA® transactions. (StudioCloud asks you if you really want to process the credit card without this information)
      • The transactions are “Batched” or “Settled” within 24 hours (This could occur when auto-batch is not turned on for your Cayan account)
      • The order/invoice Number entered.  (StudioCloud asks you if you really want to process the credit card without this information)
  • Mid-Qualified
    • For MOTO/Internet Accounts, rates usually fall directly to Non-Qualified, not mid-qualify, but these are the possible reasons why a merchant may be charged a Mid-Qualified Rate
      • AVS information is not entered (StudioCloud asks you if you really want to process the credit card without the required information)
      • Transaction/Batch is not settled within 24 hours (This could occur when auto-batch is not turned on for your Cayan account)
      • Card is a Rewards or Business card (Review Details Below Regarding Reward Cards)
  • Non-Qualified
    • If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.
      • Any of the required card or transaction information is not entered (StudioCloud asks you if you really want to process the credit card without the required information)
      • The consumer uses a Corporate, Government or International card (Review Details Below Regarding Reward Cards)
      • Authorization code is manually keyed in to your processing terminal.
      • Transactions are not settled/batched within 48 hours. (This could occur when auto-batch is not turned on for your Cayan account)

Request A Detailed Summary Of Transaction Downgrades

Unfortunately there is no way for you to run this report manually but you can contact the Cayan Client Service department to request this report. The report is not available until the month is over. Client Service can be reached at 800-941-6557 option 2. When calling you should have information ready to verify your account such as the Merchant ID, Federal Tax ID, and/or bank account information that Cayan does the deposit to.

How To Identify Reward Cards

A majority of the rewards cards say that they are reward cards on the name. For example, Capital One Venture Rewards, Citi ThankYou Preferred Rewards, Chase Freedom, Sapphire etc.  Some reward cards, however, do not have any visual way of identifying them as reward cards.

Are All Reward Cards The Same?

No. There are different types of reward cards. One type of rewards cards are called enhanced reward card and actually fall into the Corporate, Government, or International card category because the reward card offers rewards outside the bounds of normal reward cards.

How Do You Know Which Rewards Card Will Be Mid-Qualified Versus Non-Qualified

Here is the response from Cayan regarding this question.

"The rates for each card are ultimately decided upon by the interchange banks that issue them, and we don’t know what will be what until we bounce all of the transactions across those banks at the end of the month to calculate the bill.  Sometimes, if a transaction downgrades because of a mechanical issue (non-verified, entered incorrectly, etc) we’ll be able to tell beforehand, but as far as what will be rewards/enhanced rewards/corporate/etc., we simply don’t know beforehand.  This is, to my knowledge, the way the entire industry works."