Depending on the Credit Transaction Level I, II, and III, a Vendor and Customer May Qualify for a Lower Interchange Rate

Scott E. Blakeley, Esq.
November 9th, 2012

Depending on the detail of the information that is passed on with the credit transaction (in the Business to Business setting there exists three levels), the transaction may qualify for a lower interchange rate. The lower interchange rate given from the credit card companies to the vendor can then be passed on from the vendor to the customer via a transparent surcharge if the settlement agreement is approved and adopted. This will effectively reduce prices for the customer. Below are the three levels and the information necessary to reach each level.

Level 1: Merchant location zip code, location state; merchant name; transaction amount; date.

Level 2: Must include level 1 information; merchant tax ID number; business and corporate cards must include sales tax; purchasing cards must include sales tax and customer code; merchant minority code and merchant state code.

Level 3: must include level 1 and 2 information; Business and corporate cards and purchasing cards must include line item data; item product code and/or item name.

Therefore, by requiring more information from your customers during a credit transaction, the credit card company may pass on a lower surcharge percentage rate to you as the vendor which you can then pass on to the customer reducing the added factored in price to the overall sale price of the transaction. This is a key way to reducing the vendor’s exposure to higher surcharge rates and maintain a lower, more competitive rate for your customers.

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