B2B payment processing comes with unique opportunities that many businesses don’t fully understand.
Unlike consumer transactions, business-to-business payments often involve higher transaction amounts, corporate purchasing cards, and specialized data requirements that can either save you money or cost you more.
The problem is that your payment processor has no financial incentive to help you qualify for the lowest possible interchange rates. Their markup is the same whether you qualify for the cheapest possible interchange category or the most expensive.
This means that the vast majority of B2B companies are paying way more than they should be to accept card payments. I’ll show you how to cut these costs without switching providers or disrupting your operations.
Make Sure You’re on an Interchange-Plus Plan
Interchange-plus pricing is the foundation for cost-effective B2B payment processing, and the only way to truly get the best deal. With this structure, you pay the wholesale interchange rates set by the card networks (Visa, Mastercard, etc.) and then a markup to your processor.
This gives you full transparency into exactly what you’re paying on each transaction, which is crucial in B2B payment processing because commercial transactions often qualify for lower interchange rates when processed correctly.
If you’re on an interchange-plus contract, you can see exactly when you’re getting those optimized rates and when you’re not. And you’ll also see how much your processor is marking up your transactions on top of the interchange rate.
Depending on your industry and setup, your processor shouldn’t be marking up your B2B transaction more than 10-30 basis points. If you’re paying more than this, then there’s definitely room for negotiation.
Not sure if you’re on an interchange-plus plan? Check out our guide that explains how to read your merchant statements, and you’ll be able to tell pretty quickly.
Avoid Flat-Rate B2B Processing
Processors love to push flat-rate processing on businesses because the “simplicity” is an easy sales pitch, but it’s almost always more expensive for B2B companies.
Paying 2.9% + $0.30 per transaction seems pretty straightforward and easy to plan for. But here’s the problem with this simplicity.
B2B transactions could qualify for interchange rates as low as 1.75% + $0.10 per transaction.
If you’re on a flat-rate plan, you’re still paying 2.9% + $0.30 every time, meaning your processor’s markup is over 115 basis points—which is WAY more than you should ever be paying.
On a $5,000 B2B transaction, that’s the difference between paying about $87 in processing fees versus $145. Multiply that by hundreds or thousands of transactions per year, and you’re looking at tens of thousands of dollars in overpayments.
That’s why flat-rate payment processing destroys profit margins for B2B businesses.
Avoid Qualified, Tiered, or Bundled B2B Contracts
Tiered pricing structures are even worse, and processors design them to confuse B2B merchants. Under these plans, transactions are typically sorted into categories like:
- Qualified (lowest rate)
- Mid-Qualified (higher rate)
- Non-Qualified (highest rate)
The qualified rate is often really low, but it’s basically just used for sales purposes as a way to lure you in. Few, if any, of your transactions will actually qualify for this rate.
That’s because your processor has total control over how each transaction is categorized. Transactions that should qualify for the lowest rate are arbitrarily bundled into more expensive tiers.
We’ve seen B2B companies paying non-qualified rates as high as 3.5% to 4% on transactions that should cost less than 2%. There’s no transparency in this system and virtually no way to verify if you’re getting fair treatment.
In short, stick to interchange-plus pricing for your B2B transactions.
Don’t Switch Payment Processors
One of the biggest mistakes that B2B companies make is constantly switching payment processors in search of better rates. This almost always backfires for several reasons.
First, switching processors is an expensive headache. It involves significant upfront costs and operational disruptions. You’ll need to update payment systems, retrain staff, and potentially lose customer payment information.
Second, the “better rates” promised by your new processor are often temporary. We’ve seen processors raise rates after just a few months.
Third, your existing processor has room to negotiate once they realize you’re serious about leaving. You can probably save 30% or more just by threatening to switch processors (even if you don’t have any intention of doing so).
The best approach is to audit your current processing costs and identify areas for improvement directly with your current provider. Even if you’re on a flat-rate or tiered pricing plan, you don’t need to switch providers to get an interchange-plus deal. Just re-negotiate those terms with your existing processor.
Submit Level 2 and Level 3 Card Data to Optimize Your B2B Interchange Rates
This is where B2B companies can really achieve significant savings. When you process corporate or commercial purchasing cards with enhanced data, you can qualify for much lower interchange rates.
Level 1 data just includes basic info like the amount and card number. That’s all that’s required for consumer transactions, but it results in higher interchange rates for business cards.
Additional Level 2 and Level 3 data, like sales tax amounts, customer codes, invoice numbers, product codes, line-item details, and shipping information, can help you qualify for the lowest possible B2B interchange rates.
It’s slightly more work to set this up for your business, but it can save you tens of thousands of dollars every month.
For example, Visa’s new CEDP (Commercial Enhanced Data Program) offers interchange rates as low as 1.75% + $0.10 for qualifying B2B transactions. Large ticket B2B transactions can qualify for interchange rates at 1.30% + $35.
Whereas non-qualified corporate purchasing cards can be downgraded to 2.95% + $0.10 per transaction. That downgrade nearly doubles your cost compared to optimized Level 2 and Level 3 rates, turning what could be a 1.30%-1.75% transaction into a 2.95% fee.
Make it Easier For Your Clients to Pay Using Alternative Methods
Letting your clients pay via credit card is obviously convenient for them, and they probably like earning rewards for spending. That said, you can at least offer them alternative payment options that would be cheaper for your business to accept.
Examples include:
- Debit Cards — As low as 0.05% + $0.21 per transaction at the interchange level
- ACH Transfers — As low as $0.20 to $1.50 per transaction
- Checks / eChecks — About the same as ACH transfers
Your existing processor can help you accept these alternative payment methods.
I’m not saying you need to abandon credit card acceptance completely. Just offer the option to your clients without making them jump through hoops to pay you another way.
Even a dozen or so of these transactions every month can help lower your effective rate (total processing costs).
Audit Your Monthly Merchant Statements For Hidden Charges and Random Fees
When was the last time you sat down and reviewed your monthly processing statement?
I mean really reviewed it, line-by-line. Not just glancing at it, pretending to understand, and then throwing it into a drawer.
Processors make these statements incredibly complex on purpose. Statements are intimidating to read, even if you’re a well-educated business owner who’s financially savvy.
This added complexity makes it easier for your processor to bury hidden fees, rate increases, or potentially padded assessments because the only way to spot these things is if you’re actually scrutinizing every line item every single month.
And you typically need to compare one statement against the previous month to identify potential rate increases and fees that don’t belong.
You need to make a habit of doing this whenever your statements arrive. Carve out 30 minutes to an hour of your time to educate yourself on your fees. If it’s too confusing or you simply don’t have the time, our team here at MCC can give you a free audit to identify savings opportunities.
Negotiate Better Terms Directly With Your Credit Card Processor
This might be the best-kept secret in payment processing: your rates are negotiable. Everything other than the interchange rates set by the card networks is on the table.
Don’t just blindly accept your processor’s markup at face value (especially after they increase your rates).
You can pick up the phone right now and ask them to lower your rates. Will they do it instantly? Probably not.
But be persistent and don’t give up.
You have a better chance of landing a better deal if you know what you’re talking about. That’s why it’s so important to read your statements every month.
Trust me, your processor doesn’t want to lose your business. Especially on a B2B account where they’re already earning a ton of money. So you have more leverage than you might realize here.
Work With a Merchant Consultant
Working with a merchant consultant is essentially a shortcut to lowering your B2B processing rates because everything is handled on your behalf.
Merchant consultants don’t sell you processing or tell you to switch providers. They simply identify and achieve savings opportunities with your current provider.
It’s a little bit of everything that we’ve talked about so far—ensuring you’re on the right contract structure, taking steps to optimize rates, auditing statements, and negotiating directly with your processor.
The beauty of working with a company like MCC is that we spot things that most businesses would otherwise overlook.
For example, let’s say you commit to auditing your statements for an hour every month. How do you actually know if a random one-off fee is legitimate or just your processor trying to rip you off? Or what happens when you pick up the phone to negotiate and your processor says you’re already getting the best deal?
We know this stuff because we have thousands of statements from other B2B clients to back it up.
Our team knows exactly which rates can be negotiated and even removed from your statements altogether. And after we’ve secured your savings, we continue to protect them indefinitely by reviewing all of your statements moving forward. So if your processor tries to sneak in a rate increase or new fees down the road, we’ll find them and handle everything on your behalf.
Get a free audit today to find out how much you can save on B2B payment processing, without switching providers.