fortpoint_b2bproc_admin, Author at B2B Payment Gateway | Level 3 Data

How To Lower Corporate Card Interchange Rates

March 22, 2018November 19, 2015 by fortpoint_b2bproc_admin

There have been a few recent changes cut-corporate-card-interchange that affect the way a business can process b2b transactions that could drastically cut b2b payment processing fees. First, if your business hasn’t looked into level 3 data rates, it might be time to start.

Earlier last year, Visa introduced a program that allows Corporate Cards to qualify for Level 3 Interchange rates. Lets take a look at Visa’s Interchange rates for cards that apply:

Commercial Level III 1.95% + $0.10
Commercial Level II 2.05% + $0.10
Commercial Business-to-Business 2.40% + $0.10
Commercial Card Not Present 2.65% + $0.10

Businesses using an interchange plus program could potentially save 45 to 70 basis points by qualifying their cards for Level 3 interchange rates. Businesses processing b2b payments on a tiered structure could save even more. This could easily eliminate any non-qualified surcharges for accepting Corporate Cards as well as lower the overall processing fee.

Businesses looking to take advantage of these savings by switching to level 3 data should make sure they have the proper processing software. If your business is set up with a business-to-consumer portal for processing b2b transactions, it’ll be time to upgrade. Luckily, there are level 3 payment portals that make processing level 3 transactions easier than ever. Although level 3 data requires more information, there’s software that will walk you through it, and even alerts you if information is missing. Having the proper software will ensure that all eligible transactions will be processed as level 3.

Master Card has also introduced a new interchange plan for small businesses called the Small Business Spend Processing (SBSP). This plan is based around the annual monetary amount a business processes. Here’s how it breaks down:

$25,000-49,999 = Business level 2
$50,000-99,999 = Business level 3
$100,000+ = Business level 4

Note that Business Level 2 and 3 are not the same as Data Level 2 and 3. In this plan, the interchange rate is determined based on what Business Level a business fits into. Using the MasterCard Elite Worldcard under business level 3 as an example below:

Business level 3, World Elite Data Rate I, 2.86%
Business level 3, World Elite Data Rate II, 2.16%
Business level 3, World Data Elite Rate III, 1.96%

We can see that if a business is processing between $50,000-99,999 per year, the level of data that’s captured really makes a difference. If a business is processing level 1 data, switching to level 2 could cut their b2b processing fee by 70 basis points. Switching to level 3 data could cut their b2b processing fee by 90 basis points. Moreover, any business still in a tiered structure could potentially save the most. Just like the Visa example earlier, this could eliminate any non-qualified surcharges as well as lower the overall b2b processing fee.

It bears repeating, if any business looking to make the switch to accepting level 3 or even level 2 data, there needs to be proper payment technology in place. Making the transition can be easy, but it’s good to have some help. Make sure that your Merchant Service Provider gives your business the correct tools in order to process level 2 and 3 data and cut b2b processing fees.

The Three Most Typical Merchant Processing Fees and How to Negotiate A Better Price

March 22, 2018November 19, 2015 by fortpoint_b2bproc_admin

When opening a new merchant account, there are several processing fees that a merchant should be aware of so they can be better prepared to negotiate a fair price and not be bogged down with unnecessary fees. Before a merchant talks to a Merchant Service Provider (MSP) they should have a good idea of how they will be taking cards and what type of cards they will be taking. negotiate-better-rate

For example, will be majority of credit card processing take place over the phone or in person? negotiate-better-rate Will the business be taking mostly consumer credit and debit cards or will the majority be corporate and government cards? Knowing these facts ahead of time will save a lot of headaches down the road.

Tiered Vs. Interchange Plus Processing

This is the first set of fees a merchant will run into and it is vitally important to determine which structure works better for your business because it will lay out the groundwork for the rest of the fees a merchant will see on their statements.

A tiered structure typically has three categories a credit card can fall into, a ‘qualified’, ‘mid-qualified’, and ‘non-qualified’ rate. Most debit cards and regular credit cards under the tiered structure will fall under the ‘qualified’ rate and have a relatively low processing fee. However, under this structure corporate and government credit cards will be ‘non-qualified’ and thus have a much higher processing fee.

If your business is B2B and will be taking mostly corporate and government cards, Interchange Plus will almost always be the better option. Interchange is the ‘true cost’ of the card, or in other words what the major credit card companies charge the Merchant Service Provider. The Merchant Service Provider will then put a markup on Interchange, hence the Plus, and that will be your cost to process. The advantage is the MSP markup for corporate and government cards is usually a lot less under this system then it would be in the tiered structure.

Monthly Minimum

Most businesses conducting B2B transactions will have a monthly minimum which is usually around $25-30. Savvy MSP salesmen will try to make it seem like a business only has to process $25-$30 in order to avoid this monthly minimum. This is false, a monthly minimum means a business has to acquire $25-$30 worth of processing fees, not sales, or else they will be charged the difference.

This means that if a business is being charged an average of 2% per transaction, they would have to sell $1500 worth of their product/services in order to hit a $30 monthly minimum. It is advised for new businesses to include the monthly minimum in their operating budget, especially if it is uncertain how much income will be generated in the early stages. Fortunately, the monthly minimum is usually easy to negotiate and can be brought down to a more manageable number.

Swiping vs. Keying

While it seems like a no brainer, determining how your business will be processing the majority of their credit cards is of the upmost importance. If a business is set up as a ‘swiped’ account, meaning the majority of cards will be processed in person, then processing transactions without the card present will result in a much higher rate.

Most businesses conducting B2B transactions will not be processing the card it person, so be sure to be set up as a ‘keyed’ account. Although most ‘keyed’ accounts have a higher processing percentage, it pales in comparison to the rates a business would be charged by keying transactions after being set up as a swiped account.

3 Keys dramatically lower payment processing fees on B2B payments.

March 22, 2018February 25, 2014 by fortpoint_b2bproc_admin

cash_key Whether you’re starting a brand new business or have been processing for years these three keys will help you lower your credit card processing fees on B2B payments, which can have an immediate and significant impact on your bottom line.

1. Do Your Research

Picking the right merchant service provider can be a time consuming and stressful experience. Because of this, many new businesses will just go with the first merchant service provider they come across. It’s important to research multiple merchant service providers so you can compare the few that accommodate your B2B transactions. Think about who your customers are and how you will process credit cards. What percentage of your transactions will be swiped vs. keyed in?

If your business needs to process level 2 or level 3 data, pick a merchant service provider that will be able to accommodate those needs. Most sales reps are only trained on the industry basics with an emphasis on retail swiped businesses so chances are they will not understand how to properly set up a business that accepts credit cards from other businesses. Also, most providers will require a two or three year contract, so do your research beforehand and make sure you get this right so you’re not stuck with a provider that can’t facilitate level 3 credit card processing.

2.Shop Around

Once you’ve established which providers can accommodate your B2B processing needs, shop around get a quote from each of them. This will give you leverage so they’ll be fighting for your business. Shopping around works for business that are already processing as well. Simply call other merchant account providers and let them know what other companies are quoting you and ask if they can beat it. Be sure to get the application in writing with all the rates and fees so you can be sure there are no other hidden fees.

Show them your existing statements and they’ll show you where and how much they can save on your processing fees. Many companies think they’re stuck with their merchant service provider once they start processing, this is false. In fact, a lot of providers will cover any cancellation fees you might have if you’re processing a fair amount of volume. If you’re brand new to processing, ask if you can get a copy of their contact before signing it and then show that to other providers.

After you repeat the process a few times, you’ll be amazed at how much money you’ll save in processing fees as opposed to signing the first contract you see. Shopping around is the best thing you can do to negotiate the best B2B processing fees.

3. Know Your Clients & Keep Records

After you’ve shopped around and chosen the right provider, keeping great records of your clients and their purchases will help you save money in several ways. Once you have a few months worth of processing statements, you can use that as leverage to shop around for a better rate or even renegotiate your rates with your current provider. Keeping track of your customers and learning their spending habits will also help you avoid unnecessary chargebacks.

Furthermore, keeping records will help you better understand your processing statements so you can see where and how you’re being charged each time you process a card. For example, you may notice that a lot of the payments you are taking are government purchase cards or business and corporate credit cards. If you seldom process debit cards, you are rarely getting that low “qualified,” rate that was quoted to you. This scenario would explain all of the mid and non-qualified surcharges you see on your statement.

If this is the case, you should research for better interchange fees for those specific cards instead of being enticed by low rates that typically only apply to cards that you rarely receive from customers. Also, if you haven’t already, look into the benefits of processing level 3 data.

How another recent credit card data breach at Neiman Marcus applies to B2B payments

March 22, 2018January 15, 2014 by fortpoint_b2bproc_admin

Just weeks after Target revealed its security systems were breached, the upscale department store Neiman Marcus confirms thieves have stolen their customer’s credit and debit card information during the holiday season.

Ginger Reeder, a Neiman Marcus spokesperson, confirmed that the retailer had been notified as early as mid-December of suspicious activity. Their credit card processor stated fraudulent charges have actively been occurring following customer purchases. A forensics firm conducted further research on January 1st and confirmed that Neiman Marcus was the victim of cyber security intrusion resulting in their customer’s credit and debit card information being compromised. Neiman_Marcus_breach

Reeder is now working with the Secret Service Neiman_Marcus_breach to amend the issue but stopped short of stating just how many consumers were affected. Although the numbers were not released, she has stated that the customers affected are being contacted.

“We have begun to contain the intrusion and have taken significant steps to further enhance information security,” Reeder said in an email. “The security of our customer’s information is always a priority and we sincerely regret any inconvenience.”

Neiman Marcus is just one example of the dwindling security around credit card information in the US for the past 10 years. Target’s breach last month has been estimated to affect around 40 million of their consumers resulting in the theft of credit and debit card information along with addresses, names, and security codes.

The ongoing investigation has also shown that as many as 70 million customers using Target’s customer service line and online store had their information, including phone numbers and emails, stolen as well. Reports show that some of these numbers intertwined. If these numbers are correct, Target’s breach would be the largest in US history, surpassing TJX’s breach of 90 million in 2007.

How this can been avoided in the future.

The highly anticipated EMV Smartcard, which secures data in an embedded chip, could be the answer to retail credit card theft in the US. Most of the cards in US circulation right now use a magnetic strip to hold consumer data, an outdated technology that has made the US a top target for cyber criminals around the world. The EMV Smartcard has already been widely adopted in most of Europe and could’ve easily stopped Neiman Marcus or Target’s retail breach. The EMV Smartcard is anticipated to be in full circulation in the US by late 2015.

How do these retail breaches relate to B2B Payments?

Although the EMV Smartcard may fix face to face transactions, the issue of online or MOTO (mail order/telephone order) fraud would still remain, which is typically how business to business transactions are done. This is why it’s extremely important for companies accepting B2B Payments to consider the lesser known concept of level 2 data & level 3 data.

The advantage of Level 2 and level 3 credit card processing is that it makes committing fraud extremely more difficult for criminals and it decreases the cost to accept a business, corporate or government purchasing card by as much as 39%.

The idea behind this concept is simple, the more information provided, the lower the chances are for fraud. This due diligence is rewarded by Visa and MasterCard through a significant discount on the interchange rates and fees associated with accepting a credit card.

Any business that is serious about protecting itself and its customers from fraud should use a B2B payment gateway that is level 3 data capable. It will give business owners peace of mind knowing they are accepting payments in the most secure methods available in addition to paying the lowest processing fees allowed by Visa & Mastercard.

5 New Payment Technology Trends to Look Out For in 2014

March 22, 2018January 10, 2014 by fortpoint_b2bproc_admin

2014 looks like a promising year in payment technology. There have been several new technologies introduced that will change the way the average consumer makes day-to-day purchases. Some might be fads that will come and go, but there are some payment technologies on the horizon that look quite promising.

New Payment Processing Technologies

1. EMV Smart Cards

First, look out for a rapid increase in EMV smart cards in 2014. Many major credit card companies have already announced that they will fully switch to EMV smart cards by late 2015. EMV smart cards will replace the outdated magnetic strip cards that consumers in the USA use daily. These new type of cards will provide more security with an encrypted chip embedded inside the card that stores all the payment information. Hopefully the transition will significantly cut down on data theft and identity fraud when a consumer swipes their card at a POS system. Most European countries have already adopted EMV technology so expect 2014 to be the year of EMV in the US.

2. Coin

Another promising payment trend that will make a lot of headway in 2014 will be Coin. Coin is a credit card sized device that stores all of your credit card, debit card, and gift card information allowing you to swap from card to card whenever you want. Their “one card to rule them all” motto seems to be catching on very quickly. They launched a pre-order campaign in November of last year and reached their $50,000 goal in just 40 minutes. The device is just as thin as a regular credit card and can hold up to 8 credit cards making it perfect for anyone with a cluttered wallet. Coin can even connect to your iOS device via Bluetooth.

3. Mobile Payment Technologies

Mobile payment technologies gained a lot of traction in 2013 and will only get bigger in 2014. Google Wallet and LevelUp have already became very popular and now other merchant service providers are trying to catch up. For example, PayPal introduced their own mobile wallet payment platform earlier this month, and many companies are following suit. Retailers are taking note too. In fact, companies like 7-11, Best Buy, CVS, Gap, K Mart, and many more have announced they will offer mobile payment solutions for their stores by late 2014. Whether it’s NFC or QR codes, mobile payments are not going away and expect to see a dramatic increase in contactless POS systems in 2014.

4. Bitcoin

Although the Bitcoin market has been less than stable, it’s not stopping major retailers from hopping on board. Even with Bitcoin losing half of its value in November, major retailers like Overstock.com have announced they will accept Bitcoin by the 2nd half of 2014. Overstock isn’t alone. Other companies like Virgin Galactic, Baidu, Zynga, and more have all announced they will accept Bitcoin this year. Although the currency is extremely new, expect to see a lot more companies jump on board, especially if it proves to be lucrative for the early adopters. Whether Bitcoin succeeds or fails remains to be seen, but at the rate it’s going now, more and more retailers will be testing the waters.

5. B2B Payment Gateways

Merchants that do a good amount of business to business and government contracting are using payment gateways tailored specifically for their business type. This is mostly due to the fact that they need a technology that enables them the ability to process level 2 & level 3 data. These data points not only create a more secure transaction but offer the merchant the opportunity to save up to 39% on their credit card processing fees. There are many level 2 data capable payment gateways out there however there are only a few that offer both level 2 & level 3 data capabilities. This is extremely important to those merchants who work with government agencies the require vendors to process level 3 data or merchants who simply want to experiences the deepest savings available.