B2B and Commercial Card Processing
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Commercial card transactions can qualify for significantly lower interchange rates if you submit the right data. Most B2B merchants leave 0.5-0.8% on the table by not optimizing Level 2/3 processing.
If you sell to businesses or government, this page is money.
What Are Commercial Cards?
Commercial cards are payment cards issued to businesses, not consumers. They include:
| Card Type | Issued To | Typical Use |
|---|---|---|
| Corporate cards | Employees | Travel, expenses |
| Purchasing cards (P-cards) | Procurement teams | Supplies, equipment |
| Fleet cards | Drivers | Fuel, vehicle expenses |
| Business cards | Small business owners | Business expenses |
Why Commercial Cards Matter
- Higher base interchange: 2.5-2.9% vs 1.6-2.1% for consumer
- Qualification opportunity: Can drop to 1.9-2.0% with Level 2/3
- B2B concentration: If you sell B2B, 30-60% may be commercial cards
Level 2 and Level 3 Data
Card networks created data levels to facilitate more detailed B2B transactions. More data = lower interchange.
Level 1 (Standard)
Basic transaction data everyone submits:
- Card number
- Expiration date
- Transaction amount
- Merchant name
- MCC
Result: Highest interchange rate
Level 2 (Enhanced)
Level 1 plus:
- Tax amount
- Customer code / PO number
- Merchant postal code
Result: ~0.3-0.5% lower interchange
Level 3 (Full Detail)
Level 2 plus line-item detail:
- Item descriptions
- Product codes (commodity codes)
- Quantities
- Unit prices
- Freight/shipping amounts
- Duty amounts
- Destination postal code
Result: ~0.5-0.8% lower interchange (vs Level 1)
Savings Calculation
Example: $500 Commercial Card Transaction
| Level | Interchange | Fee | Savings vs L1 |
|---|---|---|---|
| Level 1 | 2.65% + $0.10 | $13.35 | - |
| Level 2 | 2.25% + $0.10 | $11.35 | $2.00 |
| Level 3 | 1.90% + $0.10 | $9.60 | $3.75 |
Annual Savings Example
| Scenario | Calculation | Annual Savings |
|---|---|---|
| $500k B2B volume | $500k × 40% commercial × 0.5% | $1,000 |
| $2M B2B volume | $2M × 40% commercial × 0.6% | $4,800 |
| $10M B2B volume | $10M × 40% commercial × 0.7% | $28,000 |
Network-Specific Requirements
Visa Commercial
| Data Level | Requirements | Rate Category |
|---|---|---|
| Level 2 | Tax, customer code | Commercial Level II |
| Level 3 | Full line item | Commercial Level III |
Visa requires:
- Tax indicator and amount
- Customer code (up to 17 chars)
- Line items for Level 3
Mastercard Commercial
| Data Level | Requirements | Rate Category |
|---|---|---|
| Level 2 | Tax, customer code | Data Rate II |
| Level 3 | Full line item | Data Rate III |
Mastercard requires:
- Tax amount and indicator
- PO number
- Line item detail for Level 3
American Express
Amex has less standardized Level 2/3 support:
- Enhanced data options vary
- Contact Amex directly for B2B optimization
- OptBlue program may have different requirements
Required Data Fields
Level 2 Fields
| Field | Description | Example |
|---|---|---|
| Tax amount | Total tax charged | $42.50 |
| Tax indicator | Tax status | Taxable, Exempt, etc. |
| Customer code | PO or reference number | PO-12345 |
| Merchant postal code | Your zip code | 94105 |
Level 3 Fields (Per Line Item)
| Field | Description | Example |
|---|---|---|
| Product code | Commodity or SKU | 5111-00-000-0000 |
| Description | Item description | Office Supplies |
| Quantity | Number of units | 10 |
| Unit of measure | EA, BOX, CS, etc. | EA |
| Unit price | Price per unit | $5.00 |
| Extended amount | Line total | $50.00 |
| Discount amount | Line discount | $0.00 |
Additional Level 3 Fields
| Field | Description |
|---|---|
| Ship-from postal code | Origin zip |
| Ship-to postal code | Destination zip |
| Freight amount | Shipping cost |
| Duty amount | Import duties |
| Order date | When ordered |
Implementation Guide
Step 1: Assess Opportunity
Calculate your potential savings:
1. Pull 90 days of card transactions
2. Identify commercial cards (BIN lookup or processor report)
3. Calculate commercial card % of total volume
4. Estimate savings: Commercial volume × 0.5%
If savings < $1,000/year, may not be worth implementation effort.
Step 2: Check Processor Support
Questions for your processor:
- "Do you support Level 2/3 processing?"
- "What fields do you require?"
- "How do I submit Level 2/3 data?"
- "Is there additional cost for Level 2/3?"
Most modern processors support Level 2/3. Implementation varies.
Step 3: Map Your Data
| Required Field | Your System Field | Notes |
|---|---|---|
| Tax amount | order.tax | |
| Customer code | order.po_number | May need to capture |
| Product code | item.sku | Map to commodity codes |
| Description | item.name | Truncate to 35 chars |
| Quantity | item.quantity | |
| Unit price | item.unit_price |
Step 4: Implement
Option A: Processor handles it
- Submit required fields to processor
- Processor formats for networks
Option B: Gateway/integration handles it
- Configure gateway for Level 2/3
- Pass data through API
Option C: Third-party Level 3 service
- Specialized services optimize submission
- May be worth it for high volume
Step 5: Verify and Monitor
After implementation:
- Check interchange reports for qualification
- Look for "Level II" or "Level III" categories
- Compare before/after effective rates
- Monitor for downgrades
Common Implementation Challenges
Challenge: Missing Tax Data
Problem: Your system doesn't capture tax separately Solution: Calculate tax from total, or implement tax capture
Challenge: Missing PO Numbers
Problem: Customers don't provide PO numbers Solution: Add optional PO field at checkout, use order number as fallback
Challenge: Product Code Mapping
Problem: Your SKUs don't map to commodity codes Solution: Use generic commodity codes, or implement mapping table
Challenge: Line Item Limitations
Problem: Complex orders with many line items Solution: Most processors limit line items (99-999). Summarize if needed.
Large Ticket Programs
For very large transactions ($8,000+), networks offer special programs:
Visa Large Ticket
| Tier | Transaction Size | Rate |
|---|---|---|
| Tier 1 | $8,000-$25,000 | ~1.5% + flat |
| Tier 2 | $25,000-$100,000 | ~1.25% + flat |
| Tier 3 | $100,000+ | ~1.0% + flat |
Mastercard Large Ticket
Similar tiered structure for high-value transactions.
Qualification Requirements
- Must be commercial card
- Level 2/3 data required
- Transaction must be single purchase (not aggregated)
- MCC restrictions may apply
Government and GSA
Government purchasing cards have specific programs:
GSA SmartPay
- Federal government purchasing program
- Specific interchange categories
- Requires Level 3 data
- Registration may be required
State/Local Government
- Often use P-cards
- Level 2/3 qualification similar to commercial
- May have specific reporting requirements
Operational Considerations
Invoice Reconciliation
B2B customers often need:
- Detailed invoices matching card transactions
- PO number on statements
- Line item detail for AP matching
Returns and Credits
- Level 2/3 data should accompany credits
- Partial returns need line item adjustment
- Credit qualification depends on original transaction level
Reporting
Track:
- % of transactions qualifying for Level 2/3
- Downgrade reasons
- Savings achieved vs. baseline
Scale Callout
| B2B Volume | Approach |
|---|---|
| Under $100k/mo | Level 2 only if easy. Manual effort not worth it. |
| $100k-$500k/mo | Implement Level 2. Consider Level 3 if system supports. |
| $500k-$2M/mo | Full Level 3 implementation. Measure qualification rates. |
| Over $2M/mo | Optimize qualification rates. Consider specialized Level 3 service. |
Where This Breaks
-
Consumer-heavy business. If 90% of your cards are consumer credit, Level 2/3 won't help much. Focus on commercial card percentage.
-
Implementation cost exceeds savings. $5,000 development project for $1,000/year savings = bad ROI. Assess before building.
-
Data quality issues. Garbage data doesn't qualify. Clean data is prerequisite.
Next Steps
Assessing opportunity?
- Understand commercial cards - Corporate, purchasing, fleet
- Calculate potential savings - Volume × 0.5%
- Follow assessment steps - Pull 90 days data
Implementing Level 2/3?
- Know required fields - Tax, PO, line items
- Check processor support - Ask key questions
- Map your data - System fields to requirements
Solving common challenges?
- Handle missing tax data - Calculate or capture
- Handle missing PO numbers - Add field or use order #
- Map product codes - Generic codes or mapping table
Related Pages
- Interchange Fundamentals - Understanding interchange
- Invoicing - B2B payment workflows
- Buying Payments - Processor selection for B2B