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Level 2 & Level 3 Interchange Rates : A Complete Guide

Interchange costs are one of the most significant costs to credit card processing. When it comes to B2B and government transactions, getting a transaction approved at Level 2 and Level 3 interchange rates will help reduce your credit card processing fees. These reduced rates can be attained by satisfying given data demands, which results in lower transaction costs for businesses. In this blog post, we will discuss level 2 and level 3 interchange rates, how to take advantage of it and lower your processing fees

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Level 2 & Level 3 Interchange Rates : A Complete Guide

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  1. Level 2 & Level 3 Interchange Rates: How They Work and Why They Matter for Your Business

  2. Introduction to Level 2 & Level 3 Interchange Rates Interchange costs are one of the most significant costs to credit card processing. When it comes to B2B and government transactions, getting a transaction approved at Level 2 and Level 3 interchange rates will help reduce your credit card processing fees. These reduced rates can be attained by satisfying given data demands, which results in lower transaction costs for businesses. In this blog post, we will discuss level 2 and level 3 interchange rates, how to take advantage of it and lower your processing fees. What Are Level 2 and Level 3 Interchange Rates? Level 2 and Level 3 interchange rates are intended for those merchants who can offer additional information on transactions. These levels mainly pertain to B2B (Business to Business)and B2G (Business to Government) organizations. These types of transactions qualifies for lower interchange rates in return for providing some additional data.

  3. LEVEL 1 RATES:These are the standard interchange rates applied to transactions that provide only basic information, like the transaction amount and card number. LEVEL 2 RATES:Designed for more detailed transactions, these lower rates require additional data such as sales tax, customer codes, and purchase order numbers. LEVEL 3 RATES:The most Cost-effective rates, require detailed information on line item description, item description, quantity, and shipping details. The more data provided, the lower the interchange rate, making Level 2 and Level 3 rates particularly beneficial for high-value and recurring transactions.

  4. Who Qualifies for Level 2 and Level 3 Interchange Rates? Not all businesses are eligible for Level 2 and Level 3 interchange rates. These rates are specifically designed for B2B and B2G transactions, where the additional data requirements align with the nature of these industries. ELIGIBLE BUSINESS TYPES INDUSTRIES THAT BENEFIT MOST Government contractors Industrial Supplies Wholesalers and distributors Wholesalers and distributors Manufacturers Manufacturers Large corporate vendors Large corporate vendors Service providers handling large-value Service providers handling large-value transactions transactions By meeting the criteria, businesses in these industries can leverage reduced interchange rates to improve their profitability.

  5. How Level 2 & Level 3 Interchange Rates Can Lower Processing Costs • their profitability. • COST COMPARISON EXAMPLE • Level 1 Rate: 2.5% per transaction • Level 2 Rate: 2.0% per transaction • Level 3 Rate: 1.8% per transaction • SAVINGS EXAMPLE • Level 1: $250 fee • Level 2: $200 fee • Level 3: $180 fee

  6. How to Qualify for Level 2 & Level 3 Interchange Rates • To access these reduced rates, businesses must meet specific requirements and follow best practices for compliance. • CHOOSE THE RIGHT PAYMENT PROCESSOR • Work with a payment processor that supports Level 2 and Level 3 transactions. Not all providers offer these services, so it’s important to select one that meets your needs. • COLLECT REQUIRED DATA • Ensure your payment system captures the necessary data: • Level 2: Tax amount, customer code, and invoice details. • Level 3: Line-item descriptions, item quantities, shipping costs, and destination postal codes. • TRAIN STAFF AND COLLECT THE ADDITIONAL DATA • Educate your team on collecting the additional data with every sales transaction and streamline the process.

  7. REGULARLY REVIEW TRANSACTIONS Monitor your transactions to verify that they are processed at the correct level. This helps avoid errors that could result in higher fees. Conclusion: Level 2 and Level 3 interchange rates present an excellent opportunity for businesses to reduce credit card processing costs. Companies can access these lower rates by meeting the requirements and partnering with a capable payment processor, saving money on every transaction. Whether you’re a government contractor, a wholesaler, or any B2B entity, leveraging Level 2 and Level 3 interchange rates can provide substantial financial benefits while enhancing operational efficiency.

  8. Visit us: https://merchantech.com/ Email: csr@merchantech.com Phone no: 1-800-276-3724 Address: 230 S. Sterling Drive #260 Mountain House, CA 95391 Thank You

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