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.
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.
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 credit card processor provide great rates and excellent customer service? BASYS Processing specializes in helping you accept B2B transactions. We qualify business cards at the lowest interchange rate and have specific solutions for card-not-present transactions. 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 & affordable.
BASYS Processing features:
– Live operator when you call support – no automated voice systems
– Dedicated Relationship Manager for questions and concerns
– Quick response time for your questions and concerns; you are a priority
– Family owned since our founding in 2002
– A+ BBB rating
– 90% + Customer Retention Rate
– Proactive contact with every merchant to walk through the annual PCI process
– In-house PCI Team to assist with questions and concerns
– Solutions including terminals, virtual terminals, e-commerce, mobile, and point of sale
– EMV compliant products
– Reporting for customer, sales, and inventory management
– Gift and loyalty card programs
– Easy-to-read statements
– Transparent pricing
– Tremendous savings
About BASYS Processing
BASYS Processing provides credit card and debit card processing services, and 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 Personalized Payment Processing.
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