Level 3 Credit Card Processing: Controlling Your Interchange Rates

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Credit card processing is like your consumer credit score. You have the ability to determine what your credit score is based on how well you manage your finances. The better your credit score, the better your interest rates.

As a merchant who offers credit card processing, you have similar control over your interchange rates. Instead of financial data, however, what matters is the amount and quality of information you capture about your clients’ purchases. The more data you collect, the higher your level. A higher level yields a better rate.

While Level 1 only considers merchant name, transaction amount and transaction date, Level 2 adds in customer codes and tax amounts. Level 3 goes even deeper to account for line items such as shipping details, quantities, and discounts applied.

Why is this important?

Visa and Mastercard allow Corporate, Business, and Government Purchasing cards to qualify for lower interchange rates whenever Level 2 and Level 3 data is passed along with the transaction.

As an example, consider a Visa purchase card with an interchange rate of 2.55% and $0.10 per transaction. A $5,000 sale on this card would generate $127.60 in fees. If all required Level II/III data were provided, the interchange rate would drop to 2.05% + $0.10 saving $25 for a single transaction! Imagine what this would save in a year! Even better, there are additional discounts when you process transactions over $7,000.00!

Created originally to help control excess government spending, Level 3 processing is now available on many business and corporate cards. To benefit from Level 3 rates, you need a virtual terminal capable of collecting this extra data as well as integration with a technology partner who can securely capture that data for processing.

What we offer

ECI has partnered with NET1 to offer a seamless, integrated payment solution that automates payment acceptance and allows businesses to accept credit cards directly within their existing ERP, accounting software, or online shopping cart. NET1 provides online credit card and payment processing with no installation, no credit card machine, and no complicated training necessary

NET1 users can accept credit/debit/ACH payments from a sales order or invoice with 24-hour access to processing and reporting. And with flexible Tier 1-3 processing, NET1 will automatically recognize the tier and applies the data needed for the highest savings for you.

Level 3 processing equips your business to be more competitive in B2B and B2G markets. Many Level 3 companies are moving to Purchasing Cards, commonly called p-cards. P-cards are a type of company credit card that employees can use to purchase or schedule services on behalf of their company. Larger corporations and government entities require these special cards to streamline the payment process and offer additional purchasing insights.

Created with a pre-set limit and tailored for employees, you will be well prepared to accept these cards and take advantage of even more cost savings for your bottom line. And, unlike other processors who “set it and forget it,” NET1 is actively invested in driving a return on your investment. We regularly perform routine audits of your interchange categories to ensure that you are maximizing your savings.

And while cost savings through level II/III data benefits the entire organization, additional value will be experienced by your accounts receivable department as operational efficiency improves. Imagine how much easier their job will be when they can collect payments from customers and tie them directly to the invoice without having to leave their accounting system. This is an additional benefit of having an integrated payment solution connected directly into your ERP platform – a seamless user experience and improved back office performance.

Amber Cooley

About the Author

Amber Cooley is the Sales Manager for NET1 Payment Solutions.