Business-to-Business Payments Overview

In ~2016 Visa and MasterCard saw an opportunity to move card acceptance forward and take on the check and ACH industry.They created programs for Business-to-Business(B2B) payments, Business-to-Government(B2G) payments and Large Ticket Transactions. These programs were specifically designed to allow businesses servicing other businesses to receive more competitive pricing, different from traditional consumer or retail transactions by providing certain data fields. These programs are generally referred to as Level 2 and Level 3 processing or B2B payments. Qualifications can occur in both card-present or card-not-present(eCommerce, MOTO, Hand Keyed) transactions. They target Corporate Card and Purchasing Cards(P-cards), attempting to increase cash flow of the accepting business and decreasing the time it takes to be paid. The qualifications do vary slightly by Visa/MasterCard for Level 2 and Level 3 but the categories can be summarized below. American Express offers Level 2 data but doesn’t support Level 3 transactions.

 

Transactional Data Fields

Level 2 Data fields:

  • Merchant Name
  • Transaction Amount
  • Tax Amount
  • Transaction Date
  • Customer Code /Purchase Order number
  • Merchant Zip Code

Level 3 Data fields:

  • Invoice Number
  • Order Number
  • Item Product Code
  • Item Commodity Code
  • Item Description
  • Item Quantity
  • Item Unit of Measure
  • Item Extended Amount
  • Ship-From Zip Code
  • Destination Zip Code
  • Shipping Amount
  • Duty Amount

Fee Program Purchasing* & Corporate T&E 

Commercial Level III                                                                              1.90% + $0.10

Commercial Level II                                                                               2.50% + $0.10

Commercial Card Not Present                                                            2.70% + $0.10

Commercial Standard Interchange Reimbursement Fee         2.95% + $0.10

Fee Program Business Credit

Business Level II                                                                                    2.05% + $0.10

Business Business-to-Business                                                        2.10% + $0.10

Business Retail                                                                                      2.20% + $0.10

Business Card Not Present                                                                2.25% + $0.10

The complete list of Visa and MasterCard interchange fees can be seen here:  Visa  MasterCard

Implementing B2B Payments

The key to accessing the lower rates and providing the appropriate data lays between the configuration of the  Gateway or application(ISV, Shopping Cart, Virtual Terminal, Platform) and the payment processor. Most eCommerce providers like Stripe and BrainTree do not offer level 3 payments support. Authorize.net only allows for Level 3 payment support through a TSYS configuration. It is important to insure you work with a company that understands how to implement a B2B compatible solution. Some companies highlight Interchange Enhancement/Optimization as part of their solution. This effectively requires or pre-populates the Level II and Level III fields to help force lower transaction costs. There are a variety of methods in which processors and gateways could accomplish this.

 

Calculating a B2B integration’s ROI

Most business decisions come down to a return on investment, the level of effort for development will certainly play a key factor in this calculation. A hypothetical merchant using a retail or customer focused payments provider with a cost of 2.90% plus $0.30 per transaction, will have an effective rate of ~3.00%. As a rough estimate we can calculate a savings of .50% with Level 3 interchange, however that will vary based on the mix of cards accepted. If that same merchant is processing $100,000 per month they would be saving $500 per month.  If we estimate 8 hours of development to provide Level III transaction data at $125 per hour development cost, the total expense would be $1,000. This recoups all costs in 2 months and provides and annual savings of $6,000 per year.