Level 3 processing interchange rates Will, reduce your cost of accepting commercial and or government transactions from .80%-1.5% depending on the type of card and size of the transaction.
Level 3 processing was a program that was originally put in place to help the government manage spending. Visa and MasterCard created special interchange rates to encourage government vendors to enter level 3 line item detail, by rewarding them with lower interchange rates.
Now, most every business can qualify for level 3 processing interchange rates (excluding some travel and entertainment businesses). Level 3 processing is a more sophisticated way of accepting commercial credit cards and requires a business enter enhanced data/line item detail regarding the sale.
Level 3 line item examples include: PO#, tax amount, product description, unite of measure, etc. Some of these fields may not pertain to your business, in this scenario certain information still needs to be entered. Example for tax exempt transactions, a zero needs to be entered.
Only commercial, fleet, purchasing, government, MasterCard business cards are eligible for Level 3 processing interchange rates. To receive level 3 processing interchange rates, you will also need to use a payment gateway/software capable of the additional level 3 processing requirements. Standard terminals will not support level 3 processing.
Google Visa Interchange rates to see how much level 3 processing interchange rates will affect your bottom line revenues.
Page 13 You will see interchange for commercial cards.
• Commercial Level III 1.90% + $0.10
• Commercial Level II 2.50% + $0.10
• Commercial Card Present 2.50% + $0.10
• Commercial Card Not Present 2.70% + $0.10
You pay an interchange charge of 1.90% or 2.7% before your processor adds their fee. Only transactions including level 3 detail are eligible for level 3 processing interchange rates!
Reclassifying your transactions to level 3 interchange (it can), no kidding literally adds 1%-1.5%, to your bottom line, because of these reduced interchange rates.
invoice number, tax amount, and line item detail fields like product code, item description, item quantity, unit of measure and extended item amount must be submitted with the standard sales information. In addition, specific Interchange compliance requirements must be managed and include merchant category restrictions, authorization, clearing, timeliness and registration.
Processors receive no incentive for offering you level 3 processing. Remember, this is all about interchange, not your processors rate. Make sure your processor has a working knowledge about level 3 processing and can provide you references of others they have helped. Just because your set up for level 3 processing does not mean you receive 100% of the reduced level 3 processing interchange rates. All it means is that your including level 3 detail, not that your processor has your account set up properly.
Curious to see what this may look like in terms of bottom line revenues for your company?
Give us a call at 888 790 3450 for your no obligation level 3 processing audit.
All we need is a copy of your last months processing statement. We don’t even need to see your rates, only the interchange portion.
PS: Commercial cards carry higher interchange rates for commercial transactions accepted w/o level 3 processing. If adding 1% or more to your commercial transactions has an impact on your business, we look forward to speaking with and showing you how implementing level 3 processing interchange rates will dramatically increase your profit margins, on existing sales volumes, without having to increase your sales!