14 Feb A Beginner’s Guide to Level II & Level III Rates
Is your business paying high processing fees every time you accept a business or purchasing card? If so, there might be a way for you to increase your profit margins without the need to increase your sales volume.
Business-to-business (B2B) and business-to-government (B2G) transactions typically have higher ticket amounts than business-to-consumer (B2C) transactions. That means paying inflated rates can really cut into your bottom line. This is especially true if corporate or government payments make up the majority of your sales.
Why is it more expensive to process B2B/B2G payments?
The credit card associations (Visa, MasterCard, etc.) charge a set interchange fee on every transaction. This amount is used to pay the card-issuing bank and varies depending on what type of card is used. On B2B and B2G transactions, interchange makes up the majority of the processing fees.
Interchange fees are usually higher on business and purchasing cards for two reasons:
1. Purchasing cards frequently offer cash rebates and rewards programs
Credit card companies have employed a variety of perks and benefits to entice new customers to their card programs. Chase Ink’s Business Preferred card offers an annual $1,000 travel bonus, and Capital One’s Spark card lets businesses earn 2% cash back on all purchases. Offering all those perks isn’t cheap. To offset the costs, the card associations charge higher interchange rates for these cards.
2. Card-not-present transactions are considered higher risk
Card-not-present transactions are traditionally considered higher risk than transactions where a customer is in front of you and physically presenting the card. This higher risk translates to higher rates when a card is not swiped or dipped. Coincidentally, the majority of B2B and B2G transactions take place online or over the phone, so they’re often subject to these higher rates.
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How can I lower my rates?
What you may not know is that B2B and B2G transactions fall into one of three categories (I, II, and III), with Level I-qualifying transactions having the highest rates, and Level III-qualifying transactions having the lowest.
To qualify for Level II/III rates, extra information must be provided with each transaction (this can vary from just the billing zip code to being as specific as the entire product description). You could try to manually add all that information, but it would be time-consuming, and the required information differs depending on industry, whether the sale is swiped or manually-entered, the card type, and more.
But why would you put in all that extra work when you could be using a gateway that handles that menial labor for you? High-quality processors can offer processing solutions that automatically enter all Level II/III information for you, qualifying you for lower rates with no added effort. If you want to lower your rates on business and purchasing cards, utilizing one of these gateways is the only efficient way to do it.
Final Thoughts
Qualifying for Level II/III rates can save you as much as 1.05% on B2B/B2G transaction. If you accept business and purchasing cards, make sure you partner with a processor that offers solutions to lower your rates.
If you need help qualifying for the lowest rates possible, each and every time, or if you’re not sure if the switch is cost-effective for you, contact BASYS Processing today. Our team of interchange experts will help find pricing and processing solutions tailored to the unique needs of your business.
BASYS Processing as a business partner
Does your current processor understand the unique struggles of your industry? Do they provide great rates and personal customer service? Are they offering solutions to grow your business and being proactive about helping you reduce risk and increase your savings?
Contact BASYS today to learn more about innovative payment solutions that will save you time and money. We make accepting debit cards and credit cards convenient, safe and affordable.
BASYS Processing features:
• A friendly, live voice will answer the phone when you call; no automated phone systems
• In-house PCI Compliance team to walk you through the process step-by-step, improving security and reducing costs
• Accept payments in person, over the phone or online
• Next-day funding options
About BASYS Processing
BASYS Processing provides credit card and debit card processing services, plus solutions that include terminals, virtual terminals, e-commerce, mobile, and point-of-sale, customized to fit any need. Banks, associations, and software partners depend on us to strengthen their reputations and relationships with their customers by providing remarkable service paired with ultimate flexibility and pricing. Merchants depend on us to make accepting credit cards and debit cards convenient, safe & affordable. BASYS was founded in 2002 on one philosophy: to take care of our merchants, partners, and employees so they never want to leave. We are dedicated to working one-on-one with our customers to design the perfect solution. BASYS is Personal Payment Processing.
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