How to lower credit card processing interchange fees

I’m going to explain how to lower credit card processing interchange fees. You can implement some of these ideas to reduce the interchange fees you pay to accept credit cards.  When it comes to your money, it makes sense to find ways to keep as much of it as you can.

Interchange amounts to at least 80% of the fees you pay to accept credit cards, and it goes back to your customers card issuing bank, not your processor.  When most people review their rates, they generally only look at a processors rate, even though interchange amounts to bulk of their fees.

Given the current low profit margin derived by processors today the focus should be to better manage the interchange cost and human error cost directly associated with payment acceptance.

Do you  accept credit cards from other businesses or government? If so, you have an advantage over other businesses.  Commercial cards have the ability to qualify at lower interchange rates if, level II and level III detail is provided. Commercial cards qualify at 1 of 3 different interchange levels. Level 1, level II or level III. The higher the level, the lower the interchange cost.

Think of level II and level III detail as additional information regarding a sale.  Level II, is sales tax and invoice/customer code. Level III is like item detail. Think of information you might find on an invoice.

Visa Level III Requirements

Discount Amount Unit of Measure
Freight / Shipping Amount Unit of Cost
Duty Amount Discount Per Line Item and Line Item Total
Item Commodity Code Ship-To Zip Code
Item Descriptor Destination Country
Product Code Ship-From Zip Code
Quantity VAT information (tax amount, rate, invoice #)

Mastercard Level III Requirements

Tax Amount Item Quantity
Tax Indicator Description
Customer Code (for Purchasing Cards) Unit of Measure
Tax ID Extended Item Amount
Product Code Debit or Credit Indicator

When this information is summitted with a transaction, interchange is lowered by 30%-40%.  I will use Visa as an example.  Accepting a commercial card without level 3 detail will cost you anywhere from 80 to 150 basis points depending on the type of card and size of the transaction.  This happens before your processor ads their fee.

Learn how to lower credit card processing interchange fees by reaching out to your processor to set up your merchant account to process level III detail. You will need to use a level III capable gateway. Terminals do not support level III information however, there are some companies like revolution payments who provide an optimization service that runs behind the scenes and can automatically attach this information before transactions settle.

If you have questions about level III processing or how to lower credit card processing interchange fees.

Give us a call at 888 790 3450 or email info@

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