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An INSIDE Analysis of Credit Card Processing and the Payment Industry
Understanding the Payment Industry is a tough task. Merchants are faced with confusing statements, hundreds of various payment processing fees, and numerous processing options offered by Merchant Service Providers, Payment Gateways, and other payment processing entities. The PAYMENTINSIDER provides articles, posts, and whitepapers on the Payment Industry, including this article, Visa and MasterCard Interchange Downgrade Fees, with the goal of creating transparency in this marketplace.

Visa and MasterCard Interchange Downgrade Fees

What are the penalties or fees associated with downgraded Visa and MasterCard transactions? Downgrade fees, or surcharges, for credit card transactions are relative to your type of merchant account plan. Merchants may process under various plan types – Tiered / Bucketed or Interchange Plus / Passthrough – depending on how the provider sold the merchant on the account. For this article, we’ll assume an Interchange Plus or Passthrough type of account, as that is the … Read More »

Address Verification Service (AVS)

The Address Verification System (AVS) is a system designed by bankcard processors used to verify the address of a cardholder. The system will check the billing address of the credit card provided by the user with the address on file at the credit card issuing bank. The processing network then sends an AVS response code indicating the results of the match to the payment gateway, which would be visible to the merchant. AVS only verifies … Read More »

Level 2 and Level 3 Data Processing

Credit card transactions can usually fit into one of three different categories: Level 1, Level 2 or Level 3 processing – although there may be downgrade fees depending on how the transaction is processed. With each level of processing, there is a certain amount of data and requirements needed for verification and authorization. This data can range from very limited to very detailed, depending on the type of credit card being processed. The more data … Read More »