One of the biggest problems facing businesses that are primarily B2B is paying high rates for card not present transactions. But why? The chart below shows an interchange comparison between card swiped and card not present for business credit cards, the mostly costly of Visa cards you are likely to encounter. The difference is 20 basis points or .20%. However most companies pay 50-100 basis points difference for non-swiped transactions.
The difference between what you pay and what the cost is, is all profit to the processor. There are several factors that will affect your actual rate, almost all of them relating back to ‘qualified transactions’. What’s a qualified transaction? While the term is identified in the interchange rate tables, for any business that does not have ‘pass through interchange’, what it means varies company to company. Please see past articles for more details about that.
What can you do to reduce your B2B credit card processing costs?
One of the simplest and most effective solutions is to have an account with a VIRTUAL TERMINAL. With a virtual terminal, the business will login to a secure web site and enter the credit card transaction information. You will also be able to access reporting and transaction history, if you are authorized to do so. For example, you can create limited access to the virtual terminal for sales staff, and then allow more robust access for the bookkeeping staff. You’re in control.
Are all virtual terminals alike? NO!
For example, we frequently recommend a robust solution for certain retailers that is completely inappropriate for B2B companies. Why? Because the data that is passed through varies from one virtual terminal solution to the other. It is essential that in a B2B environment to not only set up the account correctly with the proper coding (determined by your processor when your account is opened and extremely critical!!), but to also collect specific data and pass that through the processing system.
For example, an ecommerce store collects all the business contact information including name, address, phone, Credit card number, CVV, exp date etc. But the processor is not equipped to accept all that information. It only takes a few of the fields. WHAM! Instant downgrade to a costlier interchange rate, because Visa has specific rules about what data it wants to allow the ‘best rate’ for that type of credit card. On the surface, it looks as if you’ve done everything correctly. But in the back-end, the merchant is unaware that all their data is not being passed through. All they see is high credit card processing costs.
The same scenario occurs with virtual terminals. Make sure your salesperson has a thorough understanding of how interchange works and the special needs of business to business companies like yours.