Interchange Optimization


If you’re the owner or manager of a business that provides goods or services to other businesses or government agencies, you’re already aware of the importance of the capability to accept their credit and debit cards. And while this may be a convenience to both the vendor and the purchaser, every transaction comes with a costly interchange fee that eats into your bottom line. With business-to-consumer transactions, interchange fees can be  3 – 3.5% or more for every card swipe, but it does not have to be so high with Purchasing Card, business-to-business or business to government transactions. Read on to discover how your business can save over 40% on interchange fees with InterchangePros.

Interchange Optimization Explained

The credit cards that many of your customers use are categorized into three different interchange categorizations:

  • Level 1 – Applies mostly to Business to Customer (B2C) transactions. This requires the least amount of data: merchant’s name, date and time, and the transaction amount. 
  • Level 2 – Applies to many Business to Business (B2B) transactions. It involves the exchange of more data than Level 1 transactions and predictably less than Level 3 data. In addition to Level 1 type data, Level 2 data includes the merchant’s postal code, minority code, state code, invoice number, order number, tax amounts, and often a customer code. This allows businesses to more closely monitor transactions and look for red flags. 
  • Level 3 – Most commonly found with larger corporations and government entities, often as Purchasing Cards. In addition to the data transferred in Level 1 and Level 2 transactions, the Level 3 data transfer can also include quantities purchased, freight amounts, duty amounts, etc. 

The higher the level number, the lower the interchange fees.

So, the question is that if you’re a merchant who provides goods or services to Level 2 and Level 3 customers, why are you paying 3 – 3.5% or more when you could be paying a fraction of that cost? 

How Interchange Optimization Can Get You a Lower Rate

You may be paying the highest interchange fees simply for the reason that your credit system was not set up to detect Level 2 or Level 3 eligible credit cards. It will, of course, scan the cards of Level 2 and Level 3 customers, but it is unable to differentiate between those cards and cards with higher transaction fees. It winds up defaulting to Level 1 fees. InterchangePros is a company that assists merchants who deal with Level 2 and Level 3 cardholders to achieve their optimal profit on transactions. 

How Interchange Optimization Technology Works

The credit card companies that you use, like Visa and MasterCard, already process transactions using the three-level system. American Express and Discover do not offer Level III Interchange at this time. The amount of data each credit card company requires to categorize a Purchasing, business, or government card as Level 1, Level 2, or Level 3 depends on that credit card company’s guidelines. As a merchant, your concern is with the proper categorization of your customers. If a customer’s card is categorized as a Level 2 or Level 3 client by whichever credit card they happen to use, you want to reap the benefits of that special classification in your transactions. InterchangePros can automate your system so you receive the discounted interchange rate automatically. 

Typical Credit Card Interchange Rates for Level 3 Data

Card TypeLevel 3 Interchange Rates
Corporate1.85% – 1.9%
Purchase1.85% – 1.9%

Frequently Asked Questions about Interchange Optimization

The following are some of the most common questions and answers about interchange optimization. Call us if you don’t see the answer to your question here. 

How much can I save on business transactions?

This depends on what you were paying on a Level 1 rate and what rate you’ll be charged for a Level 2 or Level 3 transaction by the credit company, but typical your interchange rates drop from as high as 3.5% or more to below 2% on transactions, which would be a minimum of a 43% savings!

Who categorizes my customers’ rating levels?

The credit card company that your customer uses determines the level that your clients are billed at depending on the amount and type of data that is entered into the transaction.  To ensure the best (lowest) interchange rate, Interchange Pros automatically detects the type of card that is used and then also automatically inserts the necessary data to qualify the card at the lowest interchange rate possible.

How can InterchangePros make my business more profitable?

By reviewing your credit card collection processes, your point of sale terminals or virtual terminal will automatically process Level 2 and Level 3 transactions appropriately. That means that every sale has the potential to be a full 1 – 1.5% more profitable!