Can I access reduced interchange rates if I don’t charge tax to my customers?
Yes! But there are requirements, read on.
Visa and Mastercard have very particular rules about what is required in order to receive level 2/3 rates. The one requirement that typically causes the most frustration for merchants is a Tax Value. Per Visa/Mastercard’s rules, you are required to submit a tax value with your sale if you want to qualify for the lowest rates. In addition – that value must be greater than $0 to receive level 2 rates. Passing through a “zero” value is OK to do, and you’ll still get access to lower rates – but you won’t get the lowest possible rates by submitting a zero-dollar value unless you also pass level 3 data.
So – in a nutshell, to get the lowest rate structures, you have three basic options:
Access Level 3 Rates
Pass through all level 3 data fields, by using a system like the MX Merchant B2B App. This will qualify you for the absolute lowest rates, no matter what. Even if you have a “zero” dollar tax amount, by passing through all remaining level 3 fields and a “tax-exempt” indicator, you’ll always qualify for the lowest rate, every time. Level 3 interchange rates are typically 1.90% + $0.10/transaction for Visa, and 1.90% + $0.10 for Mastercard. For sales over $8,725, the rate is typically 1.45% + $35.00/transaction for Visa, and 1.20% + $40 for Mastercard. The MX Merchant B2B App does this for you, in the background so you don’t even have to think about it.
Access Level 2 Rates
If you don’t want to (or logistically are unable to) use a system like the MX Merchant B2B App to qualify for level 3 transactions, you can still get level 2 rates by submitting AVS information, a PO Number, and a tax amount greater than $0. Most POS systems, credit card terminals, and payment gateways are able to easily pass this data through for you, as long as you enter it in and configure your system properly. The level 2 rate for most Visa sales is 2.05% + $0.10/transaction, and for Mastercard it’s 2.00% + $0.10/transaction.
Access B2B Rates
If your business is unable to submit level 3 data and you also can’t submit a tax value, that’s OK too! Depending on your business type, you can still get access to lower B2B interchange rates. You can check to see if you’re eligible for lower B2B rates from Visa based on your business type (MCC Code) by clicking here. Usually, you’ll still save a lot of money by submitting a “zero” value for tax instead of a blank value. If you submit nothing in the tax field and also aren’t submitting level 3 data, you will NOT qualify for any rate reductions! That’s why it’s so important to use a system like MX Merchant B2B App. It does all the work in the background on your behalf, so you don’t have to worry about confusing interchange qualifications.