What is Level II Card Data, And Lowering Fees On “Purchase Cards?”

For merchants that sell only to corporate or government customers using “P-Cards” or “Purchase Cards,” significant savings can be realized by processing their credit card transactions with Durango Merchant Services!

Visa and MasterCard created a special type of credit card (Purchase Cards) used primarily by government agencies and businesses. Increasingly, corporations and government agencies are relying on this form of payment to purchase supplies & services, as the typically complicated nature of submitting a purchase invoice on Net-30 or Net-60 can be reduced to “Next Day.” Merchants benefit by receiving their funds quickly on competitive bids and government contracts where purchasing cards are the required form of payment.

The downside, however, is the increased costs associated with receiving these payments. These costs will usually be much higher than accepting a standard consumer credit card, at least for merchants that are on a traditional “Tiered Pricing” merchant account, since with a traditional merchant account, all corporate & government cards typically fall into the “Non-Qualified” discount rate (which can be 1% to 2% higher than your qualified discount rate).

The solution is to switch to an “Interchange Plus” (or “Cost Plus”) merchant account with Durango, and passing “Level II Card Data.” If you are not familiar with Interchange Plus pricing, don’t worry it’s not terribly scary. Please click on this link to read more about Interchange Plus pricing on merchant accounts.

Once you have an Interchange Plus merchant account setup, merchants can qualify their Purchase Card transactions with “Level II Card Data,” which will allow them to pay lower interchange rates on these transactions. The following details need to be included on each transaction in order to qualify for Level II interchange rates: Order ID, Order Description, PO Number, Shipping, and Tax. Those fields are required in addition to the standard information (billing details, such as name, address, etc.) If all the required data is not collected and passed with the transaction, the transaction will fall into a higher interchange rate.

The following are current (as of April 2014) Interchange Rates for Visa:

  • 2.65% + $0.10: Purchasing CNP
  • 2.40% + $0.10: Purchasing Retail
  • 2.10% + $0.10: Purchasing B2B
  • 2.05% + $0.10: Level II Data Rate

And Interchange rates for MasterCard:

  • 2.50% + $0.10: Data Rate II – Fleet
  • 2.40% + $0.10: Data Rate II – Purch
  • 2.20% + $0.10: Data Rate II – Business
  • 2.15% + $0.10: Data Rate II – Corp
  • 2.05% + $0.10: Data Rate II – Petro

As you can see, even once you include the 0.15% to 0.30% and $0.15–$0.20 rates that the processing bank will charge you to both service your account as well as to assume the risk on your transactions (in addition to/plus the interchange costs), these rates are much better than paying a non-qualified discount rates of 3.5% to 4.5%!

Level II Card Data is supported by default in Durango’s Gateway using our online “Virtual Terminal,” and via most of our integration methods (except for QuickBooks and iProcess mobile apps).

Level II Card Data is not that complicated to include on your credit card transactions, it is simply the details from the purchase invoice, and Durango’s gateway has the following fields which you would populate using our Virtual Terminal online:

Note: It is very important that you include a tax amount. Merchants with non-taxed orders will not be able to enjoy Level II card rates, as the card issuing banks do not accept $0 tax amounts any longer.

If you would like any additional information on Level II Card Data Merchant Accounts, please contact Durango today!