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For B2B companies, credit cards represent roughly 10% of all payments and swipe fees have doubled in the past decade, positioning U.S. with the highest fees in the world. In fact, interchange rates account for a significant percentage of overall payment card processing costs.  With increased pressure to reduce these costs, many business owners are looking at Interchange Optimization to lower the cost of payment card acceptance. Interchange Optimization allows businesses to submit additional line-item transaction data to obtain lower interchange fees.

L2 & L3 Payment Processing Discounts

Level 2 (L2) and Level 3 (L3) data drives down the costs of accepting business, commercial, corporate, fleet and purchasing cards. This data includes details on the goods or services purchased, payment, billing and dispute data. More specifically, L2 requires customer code and tax data, while L3 requires transaction location, goods/service description, how the payment occurred and other items. Manually entering this data results in a significant time and resource burden. 

With merchants who process high volume bulk transactions, manual information can be erroneously categorized into the L1 bucket, resulting in higher interchange fees for those transactions. For some companies, these inaccuracies can quickly add up to hundreds of thousands of dollars ending up in the credit card companies’ hands rather in the merchant’s bank account.

The following information outlines Visa’s interchange rates and the impact L2 and L3 can have on fees:

Note that processing a commercial payment card without submitting L2 or L3 data can increase costs by .45% -.60%. If you were to accept a Visa commercial payment card for a $1,000 card-present transaction, this is how the interchange rate would breakdown, depending on the level of data submitted:

No enhanced data included (downgrade):  $29.60 (1000 x 0.0295 + 0.1)

No enhanced data: $25.10 (1000 x 0.025 + 0.1) 

L2 data provided:  $20.60 (1000 x 0.0205 + 0.1)

L3 data provided: $18.60 (1000 x 0.0185 + 0.1)

That’s an $11 difference per transaction in fees alone. Multiply that by thousands of orders and one can see how the costs quickly add up.

Automating L2 and L3 data transmission in real time without manual entry can improve efficiency and allow B2B merchants to benefit from lower interchange rates. In some cases, payment acceptance can be integrated into an ERP system to streamline inclusion of line item details. Where customer service representatives once captured line item purchase details manually, this type of integration can automate the process and eliminate errors as the information is passed directly to the payment gateway in real-time with the authorization. 

How Interchange Optimization Works

For B2B merchants working with other businesses, accessing and extracting this level of card data can be a significant challenge. It requires accessing enterprise payment acceptance systems, extracting the data and formatting it for the processor in a way that allows transactions to remain qualified. While complex and often daunting, interchange optimization includes this level of detail to ensure that B2B merchants’ transactions remain qualified, enabling the merchant to get the lowest processing rate available. 

Rules-based engines can be used to organize L2 and L3 data and ensure they are filed in the right interchange fee buckets. This requires an agile, intelligent engine to sift through the more than 800 interchange fee buckets that currently exist – the rules around which are dynamic and evolving. Additionally, a rules-based engine needs to take into consideration discount programs that align with special industry conditions, market, geography and others. An engine that covers the entire transaction lifecycle – from order origination to settlement – can guarantee the best possible rates that account for all these granular details. The results can be astounding – merchants who employ this method can experience a reduced effective rate of up to 100 basis points, saving hundreds of thousands of dollars on interchange fees. 

Benefits of Working with a Consultant on Interchange Optimization

As outlined above, interchange optimization requires the coordination, extraction and conversion of data in a way most merchants aren’t equipped to handle in-house. Working with an experienced, trusted interchange optimization consultant can ensure B2B merchants enjoy the lowest interchange rates possible without having to exhaust valuable internal resources on the heavy lifting. There are many benefits to working with an interchange optimization partner:

  • Lowers interchange rates up to 100bps – putting money back in your bank account

  • Lowers operational costs associated with process inefficiencies and manual data entry
  • Improve customer satisfaction with optimized reporting that can be shared with customers

Arrow Payments simplifies the process with automated technology that helps companies minimize fees, keep more revenue and maximize profits. Interested in talking to one of our consultants to see how you can boost your bottom line? Send us a note at [email protected].


Arrow Payments helps merchants lower the cost of accepting credit cards. Our payment processing technology automatically optimizes each transaction to the lowest fee possible based on the card being used, the size of the transaction and the type of purchaser. Clients who use Arrow Payments for payment processing benefit by paying the lowest interchange rates possible on every single transaction ”  a significant savings over the 2.5%+ flat rate pricing of most merchant payment processing companies.

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