Lower Your Transaction Cost with Level 3 Payment Processing

October 10, 2016 by Paul Byrne

Business Environment eCommerce Technology
payment processing

Female computer keyboard online buy order internet

Razoyo is proud to announce that we have teamed up with payment processor Vantage Business Payment Solutions to bring savings on credit card processing to merchants. Our partnership will offer clients the ability to have Level 3 payment processing on their websites. This is great news, especially for B2B stores.

With the increase in B2B eCommerce, Level 3 payment processing has become increasingly popular. The reason for this lies with the fact that B2B transactions are usually much bigger than B2C transactions, as manufacturers and wholesalers sell their products in bulk. Since these transactions are much larger in scale, the savings from level 3 payments, which have lower interchange rates than other options, are also much bigger.

Commercial cards, such as corporate, business, and purchasing cards, are often used to accept Level 3 payments. Financial service companies see these cards as more credible, because they are tied to business operations.

Credit card issuers view Level 3 payments as a lower risk because they require much more information than Level 1 and Level 2 payments. With this information in hand, the card issuers offer lower interchange rates to merchants.  While Level 3 processing does not require the use of commercial cards, commercial cards speed up the process. Commercial cards already have the information saved and associated with the card. This is so customers will not have to enter additional information.

Payment Processing Level Qualification Chart

Evolve Systems perfectly sums up the information needed for each level in the table below.

Level 3 Payment Processing Chart

This chart explains how much information needs to be passed through the processing system for a level 1, 2 or 3 transaction to remain qualified and not downgrade, to acheive the lowest possible processing rate.

While interchange rates vary depending on the bank and other factors, level 1 and 3 payments differ by 1% or more. Also, the bigger the order, the more merchants can potentially save. One Razoyo customer saw an opportunity to reduce credit card fees by over $6,000 per year.

With the increase in B2B eCommerce, the acceptance of cards is becoming more necessary. This is because B2B buyers have become used to paying with cards online through B2C experiences. Now, these buyers expect it for B2B. Plus, the process is much faster than dealing with invoices, especially with the use of commercial cards.

Many people note a challenge to B2B eCommerce and payment acceptance is that many buyers are resistant to change. However, more and more buyers are choosing to shop online and use cards. According to Accenture, 50% of B2B buyers preferring to use credit or debit cards. That said, it is important to offer multiple payment options to make customers happy. Providing the option to pay with commercial cards using Level 3 processing can only help.

If you would like to have a free evaluation of the specific savings you can achieve by implementing Level 3 payment processing, please contact us.

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