What does the failure to meet interchange criteria cause in transaction processing?

The failure to meet interchange criteria results in a downgrade of the transaction. Interchange criteria are specific requirements set by payment networks that determine the eligibility of a transaction for the optimal interchange rate. When a transaction does not meet these criteria, it may be classified as a higher-risk or less desirable type of transaction. Consequently, it is subject to a higher fee structure, leading to a downgrade.

This downgrade process typically means that the transaction will incur additional fees, which can affect the overall cost for the merchant. It is essential for merchants and payment processors to be aware of these criteria to maximize their transaction approvals at the best possible rates. This not only streamlines transaction processing but also helps in managing overall operational costs.