Interchange Optimization


If you provide goods or services to other businesses or government agencies, accepting credit and debit cards is critical. But, the cost to accept these card fees can be prohibitive. With automation and AI technology built in to our Paymentz Gateway, Level 2 & 3 payment processing fees are optimized with the extra data required to qualify for significant interchange discounts.

Interchange Optimization- Explained

The credit cards that many of your customers use are categorized into three different interchange categorizations:

  • Level 1 – Applies mostly to Business to Customer (B2C) transactions. This requires the least amount of data: merchant’s name, date and time, and the transaction amount. 
  • Level 2 – Applies to many Business to Business (B2B) transactions. It involves the exchange of more data than Level 1 transactions and predictably less than Level 3 data. In addition to Level 1 type data, Level 2 data includes the merchant’s postal code, minority code, state code, invoice number, order number, tax amounts, and often a customer code. This allows businesses to more closely monitor transactions and look for red flags. 
  • Level 3 – Most commonly found with larger corporations and government entities, often as Purchasing Cards. In addition to the data transferred in Level 1 and Level 2 transactions, the Level 3 data transfer can also include quantities purchased, freight amounts, duty amounts, etc. 

The higher the level number, the lower the interchange fees.


How It Works & Getting Better Rates

The credit card companies that you use (specifically Visa and MasterCard), already process transactions using the three-level system. American Express and Discover do not offer Level III Interchange at present. The amount of data each credit card company requires to categorize a Purchasing, business, or government card as Level 1, Level 2, or Level 3 depends on that credit card company’s guidelines. As a merchant, your concern is with the proper categorization of your customers. If a customer’s card is categorized as a Level 2 or Level 3 client by whichever credit card they happen to use, you want to reap the benefits of that special classification in your transactions. Our Paymentz Gateway can automate the process so you receive the discounted interchange rate automatically.    

You may be paying the highest interchange fees simply for the reason that your credit system was not set up to detect Level 2 or Level 3 eligible credit cards. It will, of course, scan the cards of Level 2 and Level 3 customers, but it is unable to differentiate between those cards and cards with higher transaction fees. It winds up defaulting to Level 1 fees. With us, we assist merchants who deal with Level 2 and Level 3 cardholders to achieve their optimal profit on transactions. 

Lower your interchange rates by as much as 1% to 1.5% by accepting B2B & B2G credit cards with our Level 2 & 3 Paymentz Gateway.


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