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What does 'Catchall' mean and when should I use it?

The 'catch-all' field is an option when creating a new Region, and determines whether the Region is a fallback that will be applied in the event that there are no other Regions that match the destination address of an order. Basically, it catches all the postcodes not listed in other regions. 

So, having at least one catchall Region (with Rates) for a Shipping Zone will ensure that customers will always receive Shipping Rates if their address falls within that zone, and it is not targeted in your other Regions. 

For example, if you want to create specific Rates for Northern Ireland and then some different ones for rest of UK, then you’d need to: 

Create a Zone for UK, then create a range for Northern Ireland (using BT* to target all its postcodes ), and then you’d create a Catchall range that covers the rest of the UK. Here you don’t need to target anything manually. This option will target all the postcodes not included in other ranges of this zone. 

Note: If you want to exclude a just a small number of postcodes from the entire catchall, then the easiest way to make it work, is to leave the catchall setup and then configure a new Region, placing the small number of postcodes in the rule matches, but making sure not to add any Rates for this new Region.