Ever wondered by Visa & MasterCard have 4 different business cards?
Technically there are more than 4, but today I am referring to the Tiers 1,2,3 & 4 you most likely see on your statement. (not to be confused with level 2 & 3 processing)
These Tiers are out of your control and not caused by anything you’re doing wrong, unlike the EIRF, STND or Standard you may see on your statement.
These tiers/levels are Annual Account Spend and believe it or not, are based on how much your customers pay spends with this card. The more money spent, the higher your interchange rates for these cards.
Seems illogical but the more money your customer pays, the higher interchange rate your charged.
Visa Customer Annual Spend
VISA BUSINESS TIER 1 CARD Less than $20,000
VISA BUSINESS TIER 2 CARD $20,001 – $39,999
VISA BUSINESS TIER 3 CARD $40,000 – $99,999
VISA BUSINESS TIER 4 CARD Over $100,000
MasterCard Customer Annual Spend
MC BUSINESS LVL 1 CARD Less than $25,000
MC BUSINESS LVL 2 CARD $25,001 – $50,000
MC BUSINESS LVL 3 CARD $50,001 – $100,000
MC BUSINESS LVL 4 CARD Over $100,000
Even though these interchange rates are out of your control you can reduce some of these transactions by making sure eligible transactions clear at level 2 or level 3 interchange rates. Note: Visa business cards are not eligible for level 3 interchange rates but can qualify at level 2 interchange rates.
Setting up a merchant account to accept commercial, B2B & government cards is much different than a standard retail merchant account. These are the only cards you accept that have 3 different interchange rates.
Remember, commercial, B2B cards qualify 1 of 3 interchange rates. Level 1, level 2 or level 3. Having a general knowledge of rates and how the fees that impact your bottom line are derived, will help you make informed businesses decisions when choosing a processor who understands the B2B & B2G payment space.
Even if someone is honestly trying to do a good job for you, their inexperience when it comes to interchange and commercial credit cards could be driving your expenses up.
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