As a payment processing provider , the most common question I am asked is , “ What ’ s your rate ?”
Having spent more than 20 years in electronic payments , the question should be , “ How can you reduce the fees passing through to the card issuing banks ?” Allow me to explain .
In your industry , there are various components used to build a trailer . Each of these items has a cost . A lighting component might represent a small percentage of the total cost , while the metal frame may represent the largest percentage .
Payment processors have three primary components before we add the margin to pay our business expenses and leave a little profit . The largest of those components is called interchange , which are the fees passed to the bank of the cardholder making a purchase from your business . Interchange fees represent between 75 % to 90 % of the total cost you pay your processor . Think of it as that large metal trailer frame .
To level the playing field , all payment processors have the same interchange costs . There is no advantage , whether big or small , the same costs apply to all providers .
So , what if you could get that exact trailer frame for 30 % less ? No compromises ; no differences . It is same component ; it is just going to cost you less .
Allegiance Merchant Services is the payments partner to the North American Trailer Dealer Association ( NATDA ), and we specialize in reducing interchange costs for our customers . Visa and Mastercard provide cost incentives for commercial card payments that can add thousands of dollars straight to your bottom line , regardless of the rates your current processor is charging you .
As momentum builds in our economy it is important for businesses to ensure their payment process is optimized for cost reductions and increased efficiencies . When you accept commercial card payments , you can reduce costs by up to 1.50 % by qualifying those transactions using the technology provided by Allegiance Merchant Services .
Level 3 having the lowest cost . The higher the level the transaction qualifies , the lower your cost .
Most businesses process a transaction by capturing the sale amount , card number , expiration date , and card security code . When the card is not present or key-entered , it ’ s important to also add address verification ( primarily the billing zip code ). When these conditions are met , which is most common , the card qualifies at Level 1 . For a corporate , purchasing or fleet card , that interchange cost is 2.70 % of the sale amount on a Visa branded card .
By utilizing our Level 3 software and passing the information that would be typically included on an invoice , such as item description , item quantity , tax rate and other common data points , the same card transaction is discounted to a cost of 1.90 %, nearly 30 % less than Level 1 . For large ticket sales , such as a $ 10,000 sale on a Mastercard , the interchange rate drops to 1.20 %. Visa has a lesser threshold at $ 5,000 and a cost at 1.45 %.
It is important to have a payment processing provider who specializes in these types of transactions and advises you on how to qualify at the lowest interchange costs . To leverage these discounts , you must first be set up properly on Interchange Pass- Though Pricing . If you are not , then your processor is enjoying that extra margin . Next , your payment gateway must be able to pass Level 2 and Level 3 enhanced data elements . If you are unable to add items such as Commodity Code , Item Description and Unit of Measure , then you are not paying too much .
Software can also catch missing data elements and automate populating those fields to ensure the best qualification . Utilizing a solution with “ optimization technology ” will provide the intelligence to auto-populate data , so you always get the best rates on qualified card types .
With inflation rising due to the lagging affects of the pandemic on the supply chain and manufacturing woes , it is a good time to look at ways to shave operating costs . With Level 3 processing , you will save significantly with each qualifying sale . It could mean thousands , or even tens of thousands to your bottom line .
The card brands have separate interchange programs for corporate , purchasing and fleet cards . These programs are tiered at either Level 1 , Level 2 or Level 3 , with Level 1 having the highest cost and
28 NATDA Magazine www . natda . org