If your customers include other businesses or government agencies, many of them probably pay with commercial cards: business, corporate, purchasing or fleet cards. These cards often carry higher interchange than consumer cards. But the card networks have long offered lower interchange on many commercial card transactions when the merchant sends more detailed data with the sale. That extra data is known as Level 2 and Level 3. For businesses with significant B2B card volume, getting it right can make a real difference in cost.

What the levels mean

The levels describe how much information is sent with a card transaction.

  • Level 1 is the standard data on every transaction: card number, amount, date and merchant information. Most consumer purchases stop here.
  • Level 2 adds fields such as the sales tax amount, a customer code or purchase order number, and other identifying details.
  • Level 3 adds line-item detail: for each item, information such as a description, product code, quantity, unit of measure and unit price, along with details like freight and duty amounts.

The exact fields required for each level are defined by the card networks and depend on the card type.

Why the card networks reward the extra data

Businesses and government agencies use commercial cards to control spending and simplify accounting. Detailed transaction data helps them reconcile purchases, track tax and enforce purchasing policies. Because that data is valuable to the cardholder's organization, the networks have historically offered lower interchange rates on qualifying commercial transactions that include it.

Who benefits most

  • Wholesale distributors and suppliers that sell to other businesses.
  • Manufacturers, industrial suppliers and contractors who bill commercial accounts.
  • Businesses that sell to government agencies, schools and municipalities.
  • Professional and business services firms that invoice corporate clients.
  • Any business where a large share of card volume comes from purchasing or corporate cards.

If most of your customers are consumers paying with personal cards, Level 2 and Level 3 data will make little difference. If many of your invoices are paid on company cards, it is worth a close look.

What you need to send it

Enhanced data has to be captured and transmitted with each transaction, so your systems need to support it.

  1. A gateway or processing setup that accepts Level 2 and Level 3 fields.
  2. Software, such as an invoicing system, ERP, ecommerce platform or virtual terminal, that can send those fields automatically.
  3. Accurate data in your product records, including descriptions, codes and units of measure.
  4. Correct tax handling, since tax amount is a core Level 2 field and errors can cause transactions to miss the intended rate.
  5. A way to review transactions periodically and confirm they are qualifying as expected.

A simple example

Consider an industrial supply company that sells parts to contractors and facilities departments. Many of its customers pay invoices with company purchasing cards. Without enhanced data, those transactions carry only the basic details, and they may fall into higher commercial interchange categories. If the company's invoicing system sends the tax amount, the customer's purchase order number and the line items from each invoice, eligible transactions can qualify for lower interchange. The customer's accounts payable team also receives cleaner data for reconciling the purchase, which can make the supplier easier to do business with.

Government agencies, school districts and other public entities frequently pay with purchasing cards, and many of them expect or require detailed transaction data to meet their own reporting rules. If you sell to the public sector, ask your buyers what data they need on card transactions, and make sure your systems can supply it. Meeting those expectations can help on both cost and customer relationships.

Accuracy matters

Some systems fill enhanced data fields with placeholder values to try to qualify for lower rates. That approach is risky. The networks expect the data to reflect the actual transaction, and they have tightened validation of enhanced data. Inaccurate data may not qualify, and it can create problems with your processor and with customers who rely on the data for their own accounting. The safer approach is to send real data from your actual invoices and product records.

How to tell if you are leaving money on the table

  • Look at your statement for commercial or business card interchange categories. On interchange-plus pricing, these are itemized.
  • Check whether those categories include descriptors for Level 2 or Level 3, or whether they appear as standard or non-qualified commercial rates.
  • Ask your processor what share of your commercial card volume is qualifying for enhanced data rates.
  • If you are on tiered or flat-rate pricing, you may not benefit from enhanced data savings even when you send it, because the savings may not be passed through.

Getting B2B processing set up right

BrightStar works with B2B businesses to review commercial card volume, confirm what data your software and gateway can send, and set up pricing where enhanced data savings actually reach you. Send us a recent statement and we will show you where your commercial card transactions are landing today, and match or beat your current rate in writing. Through the BrightStar Impact Network, a share of our profit on your account also goes each month to a nonprofit you choose.

Published · BrightStar Merchant Services