Level 3 Merchant Accounts for Business

Processing Corporate, Business and Government Purchasing Cards

Setting up your business to accept purchasing cards for payment is different than establishing a standard retail merchant account or MOTO merchant account. This resource outlines the benefits of Level 3 purchasing card systems for business-to-business (B2B) and business-to-government (B2G) sellers and the keys to properly establishing a Level 3 merchant account.

Accepting Commercial Cards

Businesses accepting card payment transactions are likely being presented commercial card products like Corporate, Business, Purchasing and Government Purchasing Cards (p-cards).
 
  • More than 350 federal entities participate in GSA's SmartPay program— using purchasing cards (p-cards) to make purchases of goods and services needed for their operations, spending more than $27 billion on over 90 million transactions in fiscal year 2007.
 

What is a Level 3 Merchant Account? 

Setting up your business to accept purchasing cards for payment is different than establishing a standard retail merchant account or MOTO merchant account. 

A Level 3 merchant account qualifies for the best Interchange rates available when accepting commercial card products. 
 

About Interchange Rates

  • Interchange fees are collected and paid to the card Issuing Bank.
  • Interchange is the single largest component of merchant discount rate pricing.
  • MasterCard and Visa Interchange carry different rates and qualification regs.
  • Interchange is priced at the transaction level and depends on the combination of your industry category, method of acceptance, card product accepted and transaction size.
  • Managing Interchange to meet requirements is the key to receiving the best pricing.
 
For commercial card products, levels of qualification exist:
  • Level 1, you submit a card number, expiration date, dollar amount, invoice number, AVS. 
  • Level 2 processing requires Tax Amount. 
  • Level 3 requires Line Item Detail (and line item detail fields like product code, item description, item quantity, unit of measure and extended item amount). 

The more information that is passed with the sales transaction, the better the Interchange rate qualification. 

  • Most businesses are not submitting the data they need to qualify and could benefit by upgrading to a Level 3 Merchant Account.
 

2 Keys to Level 3

Two elements are critical for properly setting up a Level 3 merchant account.

1.  An Interchange pricing structure, without it merchants will not be able to obtain all the incentives rates available. 

A common pricing method is a 3-tiered rate plan, qualified, mid qualified and non-qualified.  Packaging rates in this fashion prevent merchants from qualifying for all the incentive rates available such as purchasing large ticket, GSA large ticket, and Visa B2B incentive rates for select industry SICs.  Tiered pricing also doesn’t account for the major differences market share, rates and qualification edits between MasterCard and Visa.  

ALL merchants, large and small, can get an Interchange rate price structure to lower their costs, but this especially important to B2B Level 3 merchants. 

2.  Level 3 Payment Technology

To submit the data needed to get the best rates, a secure, PCI certified, Level 3 payment processing technology must be used.  Standard credit card terminals are not capable of supporting Level 3.

We recommend the benefits of virtual software that can be accessed through a secure web site application.   Since storing card holder data is so important today, avoiding having card data stored on local PCs is a big selling feature. With evolving Level 3 requirements, the virtual software is always the most updated version and multiple users can access the service on any computer with Internet access without traditional software licensing, installation, networking, security and upgrade management issues.

Three Level 3 payment solutions to meet any size opportunity 

Solution 1: Virtual Terminal
A fully-hosted secure PCI compliant "virtual terminal" works on any computer with an Internet connection to conduct card transactions.  Multiple personnel can use different logins for different levels of administrative access and multiple processing from multiple computers.  A B2B virtual terminal provides an easy and effective way to accept p-card and other e-Commerce transactions with minimal investment or development.
 
Solution 2: Real-time Payment Gateway 
A direct transaction-processing using TCP/IP and the HTTPS (secure) protocol. Best for suppliers using or developing web-commerce applications that require payment processing capabilities featuring real-time transaction authorization and integrated Level-3 line item detail information. All transactions are processed securely under SSL from the supplier's servers.
  
Solution 3: File Export and Transfer
A system for processing transactions in batch files that are transferred via secure FTP.  This solution is best for suppliers who do not require real-time responses, and whose business processes require transactions be entered into and managed by their existing systems. Typically used in high volume situations, transactions may be bundled and transmitted at the supplier's discretion.  

 

Secure data tokenization solution

For large enterprises facing complex Payment Card Industry Data Security Standard (PCI DSS) compliance, tokenization is an ideal security architecture.  Using a token in place of the original card data minimizes the risk of exposing the actual sensitive data.  Payment applications that contain tokens instead of cleartext or encrypted credit card information no longer have to be audited for PCI complaince. 
 
Benefits inlcude:
  • Relief from the burden of secure card storage by using alias (tokens) for faster and easier PCI complaince. 
  • Supports business continuity plans by maintaining a secure copy of key data offsite.
  • Supports card on file recurring billing for your best repeat customers.
 

Consider upgrading to a Level 3 Merchant Account

  • If you accept business, corporate or GSA purchasing credit cards.
  • To realize the benefits of software as a service (SaaS) vs. using a terminal or traditional software deployment.
  • To avoid tiered pricing plan and paying Non-Qualified surcharges.
  • To qualify for the best Interchange rates for both MasterCard and Visa including Level 3 and Large Ticket.
 
Vantage is a full service resource for card Interchange or commercial card processing questions or for a demo or integration documentation. 

Comments

Ty Hardison
Ty Hardison
VP Business Development at Vantage Card Services, Inc.
Atlanta, GA
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Last edited: Jul 6, 2009 1:58 PM.

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