Government purchase cards (P-cards) are essential for many businesses that work with federal, state, and local government agencies. While any payment processor can technically set you up to accept these cards, accepting them at the lowest possible interchange rate requires a processor that understands government purchase card interchange—specifically how Level 3 processing data can impact your fees.
Understanding Government Purchase Card Interchange Levels
Government P-cards qualify under three distinct interchange levels:
- Level 1: Basic data; usually associated with the highest fees.
- Level 2: Adds additional data fields, such as sales tax and customer code, resulting in lower interchange rates.
- Level 3: Most detailed, including invoice-level data (e.g., PO number, item descriptions, and quantities). Level 3 processing yields the lowest possible interchange rates, which can save businesses up to 1% on each transaction compared to Level 1.
Why Level 3 Processing is Essential for Government Purchase Card Transactions
Level 3 processing was designed to give government agencies detailed transaction data, allowing them to track spending more effectively. Visa and Mastercard have incentivized vendors to use Level 3 by offering lower interchange rates for transactions that meet Level 3 data requirements. For government vendors, submitting Level 3 data is essentially like adding invoice information directly into the transaction. This data typically includes:
- PO numbers
- Product descriptions
- Quantities and unit prices
When you provide Level 3 detail, you save around 1% in interchange fees, a significant cost reduction that adds up quickly for government contractors with high transaction volumes.
Steps to Start Accepting Government Purchase Cards at the Lowest Rates
To accept government purchase cards in the most cost-effective way, insist on two essential elements from your processor:
- Level 3 Processing: Look for a processor that can automate the Level 3 data requirements so you don’t miss out on the best possible rates.
- Cost-Plus Pricing: This pricing structure separates interchange fees from the processor’s markup, giving you clear transparency on costs.
Commercial and government purchase cards are the only card types with three distinct interchange rates, and Level 3 processing ensures you qualify for the lowest one. Without this setup, you could end up paying up to 1% more on every transaction with these cards.
How Revolution Payments Can Help
Revolution Payments specializes in Level 3 processing for government contractors, suppliers, and B2B merchants. With over 20 years of experience, we’ve developed solutions that automatically include Level 3 data on every eligible transaction, eliminating guesswork and ensuring compliance with government standards.
If you’re unsure whether your transactions are optimized for Level 3 or if you have questions about how to accept government purchase cards at the lowest rate, reach out to Revolution Payments at 888-790-3450 or email us at info@ revolution-payments.com for a free consultation. Our expertise can help you lower your fees and simplify your processes so you can focus on growing your business with government and commercial clients alike.