As reported in a recent U.S. Banker article titled P-Cards Have Promise, approximately 16 percent of B2B suppliers accept commercial cards for U.S. B2B payments citing Interchange fees as a factor limiting p-card growth.
We have found through our extensive work in the B2B payments space that many businesses who are accepting commercial card payments are not qualifying for the lowest Interchange rates available. For those businesses who don’t accept commercial cards, a misunderstanding of costs is often the reason. Two of the most common problems business face is not having the proper merchant account pricing structure and using the wrong payment processing technology.
For many small businesses, they started accepting commercial cards because a large customer requested to use their card for payment. Rushing to fill this payment acceptance need, businesses implemented stand alone terminals or B2C payment software, sold to them by merchant account and bank reps with no training in B2B services. Working with reps primarily selling retail merchants in strip malls or small ecommerce accounts, businesses end up with payment technology geared for consumer transactions. These businesses also found that the “rate as low as” pricing model, having been quoted lower consumer card rates, translated to very high “non-qualified” surcharges. With all of their commercial cards downgrading to the highest rates and a price structure incapable of qualifying for incentive Interchange rates on large ticket purchases, businesses found the costs of accepting p-cards to be very expensive.
Understanding how to qualify for reduced Interchanged levels available from both MasterCard and Visa when accepting commercial cards can dramatically lower processing expenses. Businesses must partner with knowledgeable merchant service providers who can help them manage Interchange qualifications to obtain Interchange categories like Level 3 p-card, GSA Purchase Large Ticket, Purchase Card Emerging Market Large Ticket, Level 2, Commercial B2B and Commercial Data Rate III.