Point of Sale & Transactional Data Technical Information
The following information is provided for informational purposes only to provide technical background information on the Point of Sale & Transactional Data initiative to vendors.
- Level-3 “transactional” Data: is an “electronic invoice” with line-item details. It defines “what” is being purchased, “’how” the sales takes place, “who” is involved in the transaction, and “when” it takes place, it combines that information with the basic payment data and delivers it electronically to the issuer.
- Level-3 line item detail provides data elements such as a description of the product, quantity, unit-of- measure, price, price discount applied and sales tax information when applicable. It adds transparency and accountability to the taxpayer’s money spending process.
- These data elements are combined with basic transaction information such as the merchant establishment information and cardholder information.
Value Proposition for Vendors:
- Faster funding: Improves profitability by reducing payment time from 30-45 days on an invoice to 2-3 days for electronic payment. Faster payments reduce your cost of floating funds until payments are received
- Savings – MasterCard and Visa have created special rates to support Purchase Card programs reducing the merchant transaction costs (Interchange) if Level-3 line item detail information is transmitted with the card payment file. By providing Level-3 data, a supplier may reduce their credit card processing fees – often by 30% to 40%.
- NOTE: The examples below show the “Wholesale” Cost from Visa and MasterCard (Interchange) to the Acquiring Banks. The true cost to the Vendors/Merchants will be higher because they will include additional charges from the Bank and/or Independent Agents servicing their merchant processing accounts. Most independent sales agents work on commissions or “residual income”.
- SUGGESTION: Vendors should ask their merchant processor for a pricing model which shows the true interchange cost, plus a constant profit margin (sometimes called “Interchange Plus”, or “Pass-Through Plus” by the Processors).
- Example #1, Visa Interchange Exercise:
Cost for a $5000 Visa transaction without Level 3 Data: $139 or 2.78% Cost for a $5000 Visa transaction with Level 3 Data: $99 or 1.98%
Cost for a $3000 Visa transaction without Level 3 Data: $99 or 3.30%
Cost for a $3000 Visa transaction with Level 3 Data: $75 or 2.50%
- Example #2, MasterCard Interchange Exercise:
Cost for a $5000 MasterCard transaction without Level 3 Data: $147.50, or 2.95% Cost for a $5000 MasterCard transaction with Level 3 Data: $102.50, or 2.05%
Cost for a $3000 MasterCard transaction without Level 3 Data: $88.60, or 2.95% Cost for a $3000 MasterCard transaction with Level 3 Data: 77.58%, or 2.58%