All GSA Schedule contractors are required to accept government purchase cards as a form of payment. The majority of contractors and suppliers look to their bank or existing processors and accept government P-Cards like a standard commercial transactions not realizing there is a difference or that this is cutting into their profits by 30% or higher.
There is a lot of bad information about credit card processing both online and off. It seems like everyone is selling merchant services and has conditioned most merchants to become complacent and focus only on rate.
The payments industry is much more complex than most people realize. I won’t go into detail on this post but there are over 150 difference rates for commercial and purchase transactions alone.
You don’t have to become an expert but a basic understanding on how Purchase cards differ from standard commercial transactions will save you 30% in fees.
Purchase cards have tiered rates and are priced differently than commercial transactions. This was done to encourage contractors & suppliers to support the Purchase Card programs by reducing the supplier’s transaction costs when Level 3 line item detail is provided with the payment transaction.
Contractors have the ability to reduce transaction cost by 30% and more. Many contractors are under the impression because they have a cost plus rate or was told they have a good rate that they actually do.
Keep this in Mind. All Processors Have The Same Cost. This is called interchange and amounts to 80% of the fees you pay. This is set by Visa and MasterCard and can be found here.
https://usa.visa.com/download/merchants/visa-usa-interchange-reimbursement-fees-april2013.pdf
http://www.mastercard.com/us/merchant/pdf/MasterCard_Interchange_Rates_and_Criteria.pdf
The rates you see listed do not go back to your processor but the issuing bank of your client making the purchase. Contractors who are accepting government payments without Level 3 are giving up 30% in profits right off the bat.
You can see from the interchange chart Page 6 for Visa and 10 for MasterCard that costs for commercial transactions vary depending on whether level 3 data is present.
Visa
| Commercial Level III | 1.95% + $0.10 |
| GSA Large Ticket | 1.20% + $39.00 |
MasterCard
| Data Rate III | 1.75% + 0.10 | 1.91% + 0.10 | 1.96% + 0.10 |
| Large Ticket I 1 | 1.20% + 40.00 |
Level 3 varies from 1.75%-1.97%. Savings is increased on Large Ticket Transactions.
This is very important. Interchange shows the cost for each type of card. Without level 3 your processors cost is Level 2 or Level 1.
The ONLY Way you will see rates below 2% for P-cards is if you are processing Level 3 transaction detail and you processor has set you up correctly.
Level 3 can and will provide suppliers significant savings while helping them look more attractive to government buyers.
Revolution is a leading advocate and Level-3 payment processor to government contractors, providing specialized Level 3 technology resources to reduce expenses and help them look more attractive to government buyers.
Revolution Payment Systems breakthrough technology supports Level 3 processing through mobile phones, Quickbooks, retail or 100% card not present/internet. Revolution can also to send Level 3 detail on behalf of the supplier without them lifting a finger.
Questions? Give us a call at 888 790 3450 or email [email protected]