Reduce Credit Card Rates For Plumbing Suppliers
Every time a credit card transaction is made between a cardholder and a business, it’s not the business owner that goes out and takes money from the cardholder’s bank and then puts it in their account. There has to be an entity in the middle that makes this transfer happen in a timely manner that is also safe for both the merchant and the buyer. That service is what credit card companies do and they charge payment processing fees to move the funds. Every time you accept a credit card payment at your business, the credit card issuer charges you a fee for the service of processing your transaction and assumes the risk should the buyer be unable to pay. These fees they charge are called interchange fees.
Interchange fees are charged as a percentage of your overall transaction amount and a transaction fee. Many B2B vendors pay a greater amount per transaction in interchange fees because they aren’t selling small items or inexpensive services of $30 or less. As a plumbing supplier, shipments and supplies can be pretty costly, so even a 2% interchange fee is a significant bite out of your profits. It only makes sense to reduce that fee if your customers are businesses or government entities.
How much are interchange fees?
The answer depends on the different credit card companies. It also depends on how much transaction data is provided by the merchant at the time of the transaction. Enhanced data ensures that a transaction is more secure because it asks for more validation information from the buyer and the business. The more data that is provided, the more secure the transaction is considered.
There are three levels of data:
- Level I processing
- Level II processing
- Level III processing
Each of these levels corresponds to how much data is provided at the time of the transaction. Level I transactions require the least amount of data and are generally consumer transactions, such as at grocery stores. Consumer cards are not eligible for level II and level III processing. But government purchasing cards, business cards and corporate cards are eligible for level II and level III processing. If your customer has a card that is eligible level II or level 3 company, you may be entitled to discounted interchange fees.
Not only do interchange fees rely on the level of data provided, but they also depend on the issuer. MasterCard, Visa, and Discover set their own rates. However, the general range they tend to charge in processing fees is between 1.54% and 2.95%.
Level I data is the costliest. Level III processing yields the greatest savings.
How can I save my company money?
Upon learning that every credit card transaction that they accept leads to higher fees, many plumbing suppliers ask if there is a way to reduce those fees. In fact, there is.
The next question is whether or not it will disrupt their current point of sale system or if it’s going to be easy to implement. The good news is that you can enjoy greater savings while still providing excellent customer service and focus on innovation.
But to enjoy the savings, you are going to have to make your transactions more secure by having a system that provides additional information about the sale at the time of the transaction. The more information provided, the more secure the transaction, which translates into greater savings.
How much could you be saving? Well, it’s very likely that currently you are paying 2.95% plus $.10 for each transaction since that is a typical rate. But if you accept a credit card and provide level II data, then you can pay anywhere from 20% to 80% less. If you accept a credit card and provide level III data, then your interchange rate could go as low as 1.9% + $.10. If you provide enough information to qualify for level III processing, then you will pay the lowest rates.
The information that is needed to process a credit card at level II rates includes:
- Merchant name
- DatePurchase amount
- Billing ZIP Code
- Sales tax indicator
- Merchant tax ID
- Invoice number
The information that is needed to process a credit card at level III rates includes:
- Everything from level II
- Item commodity code
- Product description
- Product code
- Unit price
- Unit of measure for each item
- Discount per line item
- Line item total
- Debit or credit indicator
- Duty amount
- Discount amount
- Freight amount
- Shipping amount
How do brands like MasterCard, Visa, and Discover set their interchange rates?
The interchange rates usually take effect in April but are released in the prior February in a guide to let businesses know so they can prepare for those changes.
How Interchange Pros Helps Plumbing Suppliers
All businesses that accept credit cards are subject to interchange fees. Plumbing suppliers may realize that they are paying a disproportionate amount in interchange fees since they do not have sales at the same volume as major corporations. At Interchange Pros, we help you seamlessly switch over to a new system that allows you to enjoy more of your profits and send less of them over to the major credit card processors.
Interchange Pros™ has experience providing business-to-business (B2B), business-to-government (B2G) and other card-not-present (CNP) payment solutions for a wide range of industries and market sectors, including Plumbing Suppliers like you.
Here’s how we can help:
Many Contractors typically send in a driver to pick up material and parts, and they either call in their credit card information or pay a monthly invoice by mail or phone.
These transactions are larger, and using our proprietary Interchange Optimization system, we will slash your interchange costs!