How To Accept Purchasing Card Payments
Purchase cards offer superb value for the businesses you deliver frequent services to. As a B2B vendor provider, you have the opportunity to enhance business financial transactions. A purchasing card allows a reduced cost to sellers who receive payments with one. This is crucial for businesses purchasing from you because most cards have significant fees when sellers accept card payments. To accept purchasing card (P-card) payments, you have to provide an efficient card payment system that can smoothly integrate with your business operations. P-card payments can provide ease of use and benefit for both you and the business you are catering to by applying a feasible mathematical model and fee structure to an existing payment framework.
You can get help with finding a purchasing card that works for you. With a knowledgeable nationwide team of representatives, we will explain in detail how it works to help you decide if this solution will work for your company. Contact Interchange Pros today.
What Is A Purchase Card, and Why Are they Beneficial?
A p-card has specialized requirements that allow sellers to have lower fees when they accept these types of payments. Both Mastercard and Visa provide this reduced cost and prevent sellers and buyers from being overly burdened by fees for large B2B transactions. Cutting edge technology is designed to streamline the process and is used by processing companies to calculate the interchange expense fee amount.
P-cards provide a large amount of savings that can be between 55% to 80% off from typical credit card processing fees. It is estimated that these savings are around $63 per transaction, but will vary from business to business depending on their average transactions. This helps businesses save on payments that charge the same level of fees that it would for $10 or $10,000. The processing cost becomes affordable. Suppliers can expect that funds be automatically and electronically deposited easily, and businesses will see quicker payments with more consistent cash flow. There is the potential to save money by reducing staff because some tasks can be taken care of by the p-card payment process. For example, there is no need to perform mailing invoices, management of invoices, collections, payment deposits, and more. Cost reduction is found both in the restructuring of fees and in the reduction of work hours committed to finances.
How to Accept Purchasing Card Payments
Purchasing card payments follow a different process from that of typical card transactions. Customers will not see this option available to them. It is a strictly B2B financial service.
Purchasing Cards For Businesses
More businesses are adopting p-cards in order to pay their suppliers to help avoid massive fees on their business transactions. In doing so, sellers are responding by being more receptive to these purchases and looking for new solutions. A p-card can be integrated and made compatible with your current administrative practices and current payment system structure. Unfortunately, the number of p-card acceptance services available is small in comparison to consumer payments as the payment processing system marketplace caters more to B2C transactions than they do to B2B ones. However, there is pushback as more businesses demand these services be provided by more than just specialists.
How To Accept P-Card Payments
A p-card payment works differently from regular credit or debit card payments. Typically, the largest fee you would see on a purchase card is the interchange fee, which can make up to 80% of the total charge. This goes for both Visa and Mastercard payments. An interchange designation is attached to the card wherever it is used for payment. A business card would have a different transaction fee than what you’d see for a consumer. Most card payment technology caters to consumers but isn’t tailored to B2B transactions. Because a majority of point-of-sale (POS) technology is not equipped for Level 3 data these purchases are often charged at a far higher rate. Where Level 3 items are concerned, when business company data is entered in for this type of transaction a Level 3 interchange rate fee will be calculated. A purchase card payment can therefore be assessed a much lower rate than what a consumer is charged. A seller can potentially save hundreds to thousands of dollars, especially on large transactions.
How the P-Card Process Works
Typically, an employee will be making the purchasing decision for the employer and will use a website or a POS device to initiate the purchase. When the supplier accepts the p-card payment they only have to use their existing payment processing system.
Determining the Type of Transaction
Transaction information gets transmitted through the POS system and to the card processing network. This can be a Level 1, Level 2, or Level 3 transaction. The Level 3 transaction provides detailed data, a higher level of security, and includes the line-item detail of information. Level 2 only includes the customer-defined code and sales tax, as would Level 3. Level 1 only includes the transaction amount, the supplier, and the date.
Five Parties Play Specific Roles
These transactions require a 5 party-payment system:
1. Card Issuers
The card issuers provide programs that allow p-card transactions and are also known as card providers. Many of them happen to be financial institutions as well. They use processing networks to execute card transactions.
2. Payment Networks
These financial structures allow for the safe transaction of financial data between the merchant acquirer and the card issuer. This occurs by what rules are already set in place by the suppliers. These networks belong to MasterCard, Visa, or American Express. They are often associated with the brand of the card.
3. Merchant Acquirers
These are the agents who recruit suppliers for p-card purchase programs. They provide the POS equipment and software to allow this transaction. They make the process simpler and are often labeled as the supplier’s bank.
4. Card Payment Processors
These are the organizations that provide services to the merchant acquirers. When someone pays at the POS, they orchestrate the transition of funds and security checks between the financial institutions. They deliver authorization, secure transcription of data, statement printing, and more.
5. Purchasing Card Transactions
The card issuer will furnish an electronic invoice to the purchaser’s bank once per month. This invoice will hold all p-card transactions and add up to a total amount. The purchaser’s company pays the card issuer one payment a month for all of the purchaser’s transactions. The financial institution processes this payment and provides the sum amount to the card issuer.
When a p-card is used, the purchaser’s bank is liable for the payment and takes the cardholder out of the picture. They have to approve all the transactions once per month according to the monthly limit, single-purchase dollar limit, and the merchant category code (MCC) requirements. There may be an additional requirement that the p-card activity is periodically reviewed by someone else who is within their company.
We Can Help Save When You Accept Purchase Cards
Learn how you can accept p-card payments successfully. These payment transactions improve customer satisfaction. Our reliable team can develop a program for you that makes sense for your business needs. Call Interchange Pros today.Back To Blog