Blog - Page 2 of 2 - B2B Payment Gateway | Level 3 Data

Target’s Data Breach Indicates Level 2 and Level 3 Credit Card Processing Can be Critical to Your Business.

March 22, 2018January 6, 2014 by fortpoint_b2bproc_admin

The US is slacking in credit card data security.

Because of a malware attack on Target’s computer systems, over 40 million customers now have their credit card numbers, expiration dates, and security codes floating around on the internet’s black market. This has not been the first case of a mass security breach of a large retailer.

In July of 2005, T.J. MAX had a breach that resulted in data stolen from at least 47 million of their customers. These instances of mass theft should serve as a wakeup call for the US to increase the security of credit and debit cards. target_data_security

Instead of the widely adopted ‘smart card’ that carries data in an embedded chip, Credit Card Data Security the US still uses the less secure, magnetic strip. Smart card technology isn’t new. In fact, the majority Europe uses smart card technology, and has been doing so for the past decade. The embedded chip allows for more data encryption and could’ve easily stopped Target’s breach. With more and more countries adopting smart card technology, the US has become a top target.

Credit card information can be very lucrative on the black market. The credit card number alone might sell for a dollar or less. However, like in the recent Target case, having the name, number, expiration dates, and security codes can sell for $10 or more. Multiply that by 40 million, and it’s easy to see why this type of theft isn’t going away.

This is exactly why understanding the concept of level 2 or level 3 credit card processing is so important. The requirement for additional data is much deeper and makes it nearly impossible for a thief to commit fraud. This is mostly true for business to business and business to government companies who tend to key in customer purchasing or procurement credit card numbers.

Including these data points with a transaction significantly increases the security of a payment and in turn that due diligence is rewarded with much lower interchange rates and credit card processing fees.

Over 80 counties now use smart card technology and it’s easy to see why it’s been embraced so well. It’s much easier to steal information of a magnetic strip than it is an encrypted chip. As a result, the US has been a huge target for hackers.

So why hasn’t the US done something?

The answer is a bit complicated. To start, these type of cards do exist in the US, there’s just not a lot of them. Credit Card issuers might give them to traveling clients because very little places abroad still use magnetic strips. Still, only about 1% of cards in the US have this type of technology.

Lack of political push for greater security measures is a big reason why smart cards have not been embraced. Businesses need more regulation and if there’s no push for it things are likely to remain stagnant.

Another reason is the sheer scale of the transition. Credit card issuers, banks, merchants, and consumers would all have to make the switch to smart cards from the existing 1 billion magnetic strip cards in circulation. Making such a huge scale transition would be extremely expensive and is unlikely to happen without some sort of government reform.

The good news is that it does look like the US is slowly moving towards smart cards. Many credit card issuers have publicly stated that they plan on making the transition by late 2015. By October 2015, if a merchant or acquirer’s equipment does not support smart cards, otherwise known as EMV cards, they will be liable for any instances of counterfeit fraud instead of the issuers.

What can I do to increase security?

Merchants looking to swipe cards should ask if their machine is EMV compatible. For those Merchants doing business to business and business to government transactions you need to make sure you are setup properly with level 2 and level 3 credit card processing capabilities. It’s going to protect your business and significantly decrease the fees you pay to accept cards.

Lower The Cost to Accept Government Credit Cards

March 22, 2018December 20, 2013 by fortpoint_b2bproc_admin

State and government agencies are switching over to using purchasing and procurement credit cards with their vendors for many reasons. It streamlines how front-line managers can access products and services; and the card providers (banks) rebate the government a percentage on the amount purchased. It makes the procurement easier for the federal cardholder and the vendor. Agencies have more control and restrictions around what the cardholder can purchase.visa_purchasing_card

If your business involves government contracts, Visa Purchasing you may wonder why there is such a push to accept credit card payments. Although credit card payments might cost you more than accepting checks, it’s better than running the risk of losing a contract because your customer went with a vendor that accepts cards.

The first step any business should look into when considering accepting government cards is a level 3 payment portal. In fact, the U.S. General Services Administration (GSA) mandates that a vendor is able to processes level 3 data before signing a contract. Level 3 data includes product codes, freight information like duty, postal codes from both the products destination as well as origin, any discounts that may apply, the country code, tax information, and more.

There are many merchant service providers that offer level 3 data processing so make sure you use one that does. Luckily, with the advancement of recent technology, accepting level 3 data is easier than ever. Some level 3 payment gateways are very intuitive and may even warn you if there is any missing line item detail necessary to qualify for the lowest rate.

The ability to process level 3 data will not only better a business’s chance of winning a government contract but will also lower their processing fees up to 40%. The savings are even more significant if a vendor is still using a tiered structure. Entering in level 3 data will eliminate any non-qualified surcharges as well as lower the overall percentage of accepting government cards.

Government agencies have big incentive to use government purchasing and procurement credit cards. Tthe Department of Commerce, estimated that the use of procurement cards saved them over $22 million per year on administrative costs and the reduction in purchasing processing time. The use of these cards has allowed purchasing departments to concentrate its efforts into the 15% of the total procurement spend that accounts for 98% of the total expenditure.

The Visa Purchase Card is the most widely procurement card in the Federal government. Government financial reports indicate that in FY10, approximately 98.9M transactions were made and $30.2B were charged using the GSA SmartPay charge cards, creating $325.9M in refunds.

There are currently over 350 agencies/organizations participating in the program spending $30 billion annually, through 100 million transactions on over three million cards.

Another benefit for any business considering accepting government credit cards is they no longer have to wait an average of 30 days for a payment to arrive. The average processing time for accepting cards is 2-3 business days. This reduces the overhead cost of any floating funds while waiting for the payment to be processed.

In summary, as government agencies make the transition to using purchase cards, many businesses looking to accept government payments need the ability to process level 3 data or get left behind. With an 84% adoption rate, purchasing cards will only get bigger.

Secrets to Lowering Interchange Fees

March 22, 2018December 20, 2013 by fortpoint_b2bproc_admin

Whether your business is brand new to processing credit cards or has been doing so for years, there’s a few tips and tricks to lowering your interchange processing fee. Before we get into these, you should first Secrets to lowering Interchange fees understand how interchange works so you are better prepared to negotiate with your Merchant Service Provider.

How Interchange Works

Interchange is the process in which acquirers, card issuers, and the processors manage the fees associated in processing credit and debit cards. Interchange is often referred as the ‘true cost’ of the card, or in other words what it costs the acquiring bank to process transactions. The acquiring bank then charges a fee above interchange to the issuing bank, this fee is often called a ‘discount rate’ and that rate is passed along to the merchant.

So ultimately, the merchant is paying ‘interchange plus’ which is the interchange plus the discount rate that the issuing bank charges. It’s more important to understand that the discount rate will vary depending on what card is accepted and what Merchant Service Provider you choose.

For example, the discount rate for a debit card is usually lower than it is for a corporate credit card. Likewise, one merchant service provider might charge a much higher discount rate than another. Knowing this ahead of time will give you an advantage when negotiating a better contract.

Interchange Explained

Use a Payment Consultant or Shop Around

If you are already processing credit cards your best option is to use a consulting firm that will do the work for you. Send them your last three months worth of processing statements so they can do one of two things. They can point you to the best service provider based on your situation. Don’t worry if you’re in a contract, many providers will cover the cost of your cancellation fee.

Even better they can renegotiate your fees with your current provider so that you don’t have to go through the painful process of switching vendors yet still benefit from the savings. Their fees are normally tied to your monthly savings so the more money they save you the more money they make.

If you are new to credit card processing you can still shop around and use different quotes as leverage against other vendors. While it might not be a dramatic change, you will still get a good idea of what the average discount rate is and have a better understanding of how interchange plus works.

Ask Questions

Usually, the discount rate a merchant service provider originally quotes will not be the lowest they can go. Simply ask, “can you do any better?” Smart business people won’t give you anymore than you ask for. You’ll be surprised how much a simple question might be able to save you. Most providers have a ‘target discount rate’ and a ‘rock-bottom discount rate’ that they will use in order to win your business.

If you don’t ask they will never bring it up. As mentioned earlier, the discount rate will differ from card to card so also be sure to ask which card(s) the rate applies to. If your customers typically pay you with their company or purchasing card, that enticing discount rate you were quoted will not even apply.

Make sure to ask what the total discount rate is for the cards you’ll be accepting the most, and don’t be fooled with a discount rate for a card that’s not applicable for your business. This is key to saving money when accepting B2B payments. You can even take your savings to a deeper level by learning about level 2 and level 3 data.

Online Credit Card Processing Advice: Save on B2B Processing Fees

March 22, 2018December 16, 2013 by fortpoint_b2bproc_admin

New to online credit card processing? Not sure how to get started? Accepting cards online can be a daunting experience. However, if you’re prepared it doesn’t have to be. Knowing exactly what you need ahead of time can save you a lot of headaches down the road. Here’s a few things you need to know before getting started. processing_cards_online

It’s Not Just A Merchant Account

Processing cards online involves a lot more than just acquiring a merchant account. processing_cards_online Unless you’re a skilled programer, you’re going to need software for your website that allows you to process transactions. Obviously your customer needs an area to enter their name and credit card information online, but it doesn’t stop there.

The website needs to be secure, meaning Hypertext Transfer Protocol Secure (HTTPS), so make sure your Merchant Service Provider will be able to provide that security protocol. Failure to do so will result in being non-PCI compliant and you will be fined, even worse it runs the risk of your website being susceptible to fraud.

There are a lot of Merchant Service Providers that mostly focus on brick and mortar accounts and treat online credit card processing as an afterthought. It would be advisable to consider a Merchant Service Provider that focuses solely on online credit card processing as they are the ones that will be able to make sure you have everything you need.

Beyond just getting your client’s name, card number, and making sure your website is secure, there might be more information needed. For example, if you’re shipping a physical product you’ll need their address. But there’s even more information that needs to be considered.

Is age verification required? If so, that might put your business into a ‘high risk’ category and additional software will be needed. Not all Merchant Service Providers are able to offer age verification, so if your business needs it, choose one that will be able to offer it.

Is Level 2 or 3 Data Required?

Now that card number, name, address, security measures, and age verification are addressed, it’s time to talk about level 2 and level 3 data. Level 2 and 3 data are mostly a requirement for businesses that process business-to-business or business-to-government transactions. There are Merchant Service Providers that strictly specialize in processing level 2 and 3 transactions.

If your business needs to process these type of transactions, it’s highly advised to go with a Merchant Service Provider that specializes in that field. Level 2 and 3 data includes tax information, customer codes if applicable, merchant postal codes, product codes, freight information, postal codes, any product discounts, country codes, tax information, and more.

Again, if your business needs this data, it’s highly advised to sign with a Merchant Service Provider that specializes in it. A lot of Merchant Service Providers will allow their merchants to process transactions online, but will fall short when it comes to processing transactions requiring level 2 or 3 data. Furthermore, even if you don’t think your business needs level 2 or 3 data, you need to look into it.

The more data you have from your clients, especially online, the lower your transaction fee will be. This is because the more data you have, the higher the chance the person using a credit card is actually the cardholder, thus decreasing the risk of fraud. Visa and MasterCard reward this due dilligence by discounting your cost to accept that transaction. In fact you will save up to 33%.

Learn about Level 3 Processing to Stop Burning Money.

March 22, 2018December 3, 2013 by fortpoint_b2bproc_admin

Depending on the business, credit card transactions will fall under three different categories: Level 1, Level 2, and Level 3 processing. A business processing cards will either fit into one or all of the levels of processing depending on the type of business and what type of customers the business primarily deals with. Knowing these levels will result in a greater understanding of how rates apply and ultimately save a business money.

While each level has different processing rates, a good rule of thumb is the more data you receive from your client, the less the processing fee will be. In other words, the more data you have, the less of a risk of fraud there is, which results in a less expensive processing rate.

Level 1 Processing

Level 1 processing usually refers to business-to-consumer (B2C) processing. This might be a Burn_Interchange convenience store, a restaurant, or any other enterprise where the business is selling their product or service directly to the consumer. Level 1 processing requires the least amount of data from the consumer, usually just their name, the amount of the transaction, and the date the transaction was made.

If a business is conducting business-to-business transactions (B2B) they will almost always fall under Level 2 or 3 processing.

Level 2 Processing

Level 2 processing is the starting point for most business-to-business transactions. Depending on how much information a company requires from their clients, they might stay in Level 2 or move up to Level 3. Level 2 processing has to meet all the criteria of Level 1 processing but also has to include criteria like tax information, a customer code if applicable, and the merchant postal code.

Not only does Level 2 processing decrease the risk of fraud, it also may enhance the customer experience and customer service by providing your client detailed transaction information. Since building a strong relationship with your clientele is essential for any business, Level 2 & 3 is a great catalyst for maintaining that relationship.

Level 3 Processing

When doing B2B or B2G transactions you’ll notice Level 3 processing has to include all the data requirements from Level 2 processing in addition to several other criteria such as product codes, freight information like duty, postal codes from both the products destination as well as origin, any discounts that may apply, the country code, tax information, and more.

The more information entered, the risk of fraud is significantly less and therefore processing rates may be lower than the other two levels. Level 3 processing also requires advanced processing software to keep track of all the data that is required. If your business has a government contract that requires Level 3 processing, make sure you sign with a Merchant Service Provider that is able to give you the tools necessary to process Level 3 transactions.

There are Merchant Service Providers that specialize in Level 3 processing and it would be a good idea to seek that out instead of going with one that just has lower rates. When it comes to Level 3 data, it’s always a better idea to be safe than sorry, as being non-compliant may result in losing your client or getting your business into serious jeopardy.