B2G Credit Card Processing
Offering credit card payment options is what you do to make transactions easier for your customers. In 2019, 23% of payments made were with a credit card, which is a 2% increase from 2017. For small value payments, such as payments under $10, 49% of payments were made with cash. But beyond that, using that plastic card makes it easier for your B2G customers, as well as safer, to complete transactions. The credit card industry has processed trillions of dollars in payments, from $3 trillion in 2016 to $3.32 trillion in 2017, according to a Federal Reserve Payment Study.
If you’re a business owner, you’re already aware of how interchange fees cut into your bottom line. You owe it to yourself to find the best way to save costs on them. When conducting business between other businesses or government agencies, you can still keep your fees low and improve your payment acceptance.
B2G processing is different because the cardholder is a government entity, such as a government agency or purchasing representative. Most government agencies have a few cardholders that have the authority to make purchases up to $5,000. Other government agencies authorize purchases in the hundreds of thousands of dollars! These government-issued credit cards are often used between vendors for supplies or services, and also already have a lot of information connected to them so that they qualify for Level 2 or even Level 3 credit card processing. If you are a vendor who sells to government agencies, this fact can save you money and increase your profits.
How Payments Are Made
There are different types of cards: business cards, corporate cards, and purchasing cards. They can all be used in person, online, over the phone, or by mail payments. Business cards are usually issued to individuals representing a company or organization for business expenses, such as supplies. They are also often used on business expenses, dining, hotels, and entertaining potential new clients. A corporate card is issued to a corporation, generally with more than $10 million in annual revenue, rather than an individual. And finally, purchasing cards are commercial credit cards that allow for convenient and simplified purchasing and payment processing so companies can make business-to-business payments. When it comes to government agencies, they already record this data in the interest of maintaining oversight.
In order to make these transactions more secure, the credit companies require more data from the purchaser. To qualify for Level 2 interchange rates, the purchaser must include:
- Customer code, for purchasing cards only
- Duty amount
- Merchant name
- Purchase amount
- Billing ZIP Code
- Invoice number
- Merchant tax ID
- Tax indicator
- Merchant postal code
Challenges To Businesses Using These Cards
Businesses who want to take advantage of the lower interchange fees that often accompany government clients will need to have software and/or hardware that’s capable of differentiating between Level 1, Level 2, and Level 3 transactions. Most of your transactions will be considered card-not-present transactions, which Level 2 and Level 3 data can help with if you are able to process the payments that way.
Integrating B2G Credit Card Processing Into Your Current Accounting
By now you probably have figured that switching to Level 2 or Level 3 processing will mean that you will have to update your software and hardware. This may be true, but that doesn’t mean that you will see an interruption in your processing or that this is going to be a big headache for you and your employees. In fact, our clients rave about how easy it was to integrate this new accounting system. Often our system is able to operate within your current software!
Securing Card-Not-Present Transactions
Card-not-present transactions occur when a cardholder is not physically present in front of the merchant at the time of the transaction. They can be done over the phone, via fax, or more commonly over the Internet through a website or an app on the consumer’s phone. Whatever the method, they all share one common vulnerability: credit card fraud. This is because the cardholder is not physically present in order for the merchant to verify that they are indeed authorized to make that purchase.
When a customer is in front of you, you can watch them insert a card into the reader, swipe or tap to make their transaction. You could also ask to see a form of identification. But if a cardholder is not present in front of the merchant at the time of the transaction, such as when a customer orders over the phone or through a website, then there needs to be a way to complete the transaction safely. These transactions are much more vulnerable to fraud because the merchant can’t verify the identity of the person making a purchase remotely. The solution is to use Level 2 and Level 3 processing, which will also lower the fees you pay in interchange rates.
Credit card fraud costs businesses billions of dollars every year. Small businesses are the target of 71% of data hacks, according to the PCI Standards Council. Interchange Pros will assist in helping you to identify any threats and vulnerabilities that could impact the security of your customers’ data. By protecting your customers and their data, you will protect your brand and business reputation.
What Interchange Pros Can Do For You
When your software is updated and you are able to accept payments and pay Level 2 or Level 3 interchange rates, you save money and protect your business. When you work with Interchange Pros, your updated payment software will be able to populate the data fields necessary to take advantage of lower rates.
What kind of savings is my company going to see?
Corporate, B2B, and Purchasing Card Payments that are processed at a Level 1 are subjected to a 2.95% interchange rate plus $.10 for each card transaction. Compare that to 2.20% at Level 2, and 1.90% at Level 3 when accepting a Purchasing Card payment.
Level 1 rate: 2.95% and $.10 per transaction
Level 2 rate: 2.20% and $.10 per transaction
Level 3 rate: 1.90% and $.10 per transaction
These can amount to big savings. Give us a call today to learn more about how we can help you save up to 40% on G2B interchange fees and keep your payment processing secure for your customers.