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B2B Credit Card Processing


Reduced interchange is one of the advantages of processing B2B enhanced data transactions at your business.


Does your business sell merchandise or services to other businesses? How about local, state or federal government entities? These are known as B2B (business-to-business) and B2G (business-to-government) transactions. To qualify, the purchaser is buying on behalf of a business or government agency. A B2B payment could be a property manager buying supplies for a community clubhouse, a business paying travel costs for employees on assignment, or an entrepreneur paying for the startup costs of a business with a business account.


At one time B2B payment cycles were much slower. A seller would receive orders by phone, in person or by mail, then deliver the product or service to the buyer, along with a paper invoice. The buyer would mail a paper check back to pay or deliver cash or a check personally. The merchant would then bring the check to the bank and wait for it to clear. The order-delivery-payment period could take weeks to months.


Today B2B transactions are far more efficient. Electronic checks (ACH transfers) are commonly used to make payments, and in recent years credit cards have gained a huge share of the B2B market. eChecks take longer to authorize and clear, but are popular because of their low, flat processing rates. Commercial credit cards, on the other hand, bring speed to B2B payments. Real-time authorization and fast funding through a B2B merchant account make cash flow reliable and timely. Lines of credit allow purchasing businesses to be more consistent with payments since they are not restricted by their current checking account balances. So, in today’s business climate the seller benefits from on-time payments.


Types of Commercial Credit Cards


  • Corporate cards are issued by large businesses, who are usually liable for purchases.

  • Business cards are usually issued by small to medium sized businesses and can hold the employee cardholder jointly liable for purchases.

  • Purchase cards, also known as procurement cards or p-cards, are issued by a variety of businesses. Each transaction made with a p-card includes enough details that the business can use its statements in lieu of invoices and order receipts. They can take the form of plastic cards or just account numbers.

  • Fleet cards are issued by businesses who have two or more company vehicles. They are used to cover fuel, maintenance, repairs, and other transportation-related expenses.

Employees can use commercial credit cards to make payments online, over the phone or in store for business-related purchases in line with spending limits and other restrictions set by the employer. They assist businesses keep track of spending, and they are processed differently than traditional consumer cards.


Enhanced Data


Credit card brands group transactions according to data level, which refers to the amount of information a business includes with a transaction when it goes through the authorization process. There are three data levels, but each card brand has their own way of classifying them. Discover only recognizes data level 1. American Express recognizes levels 1 and 2, but not level 3. Visa and MasterCard recognize all three levels but their specifications for levels 2 and 3 vary slightly. Visa refers to them as data levels while MasterCard calls them data rates.


  • Level 1 data universally contains the business name, the transaction amount and the date. It is the level of all consumer credit card purchases.

  • Level 2 data contains level 1 data plus the sales tax amount, customer code, merchant postal code, tax identification number and more. Again, Visa, MasterCard and American Express have slightly different criteria for level 2.

  • Level 3 contains level 1 and 2 data plus product code (e.g. SKU or UPC), item description, quantity and unit of measure, ship from postal code, shipment destination postal code, freight amount, duty amount, invoice number, order number and more.

Initially B2B credit card processing can seem somewhat complicated. However, as you learn more, you can assess if it’s a wise investment for your business. Simply, a transaction with the least information details qualifies as data level 1, while a transaction with the most details qualifies as data level 3. Level 2 and 3 data is referred to “enhanced data” and characterizes B2B commercial card transactions. The higher the data level of a transaction results in lower interchange rates charged by the bank brands because it is more difficult for the cardholder to dispute and less likely to result in a chargeback. Why?


  • B2B payments are typically for recurring needs rather than impulsive wants (associated with business-to-consumer transactions)

  • Most B2B merchants have established, long-term relationships.

  • All the extra data passed through with B2B credit card payments serve as transaction proof against chargeback claims.

  • Fraud is less likely because commercial credit cards have pre-authorized spending limits and pre-authorized users that payment software can pick up on—and decline payments when the card’s restrictions are violated.




B2B Interchange Rates


Interchange is included in the rates your merchant service provider (MSP) charges then passed through from the card brands. When you have interchange plus pricing for your merchant account (which we highly recommend instead of tiered pricing), the interchange is what Visa, MasterCard, Discover and American Express charge for their part in authorizing and settling credit card payment funds. The markup, or the “plus,” is what MSPs charge for their part. The card brands determine interchange rates and update them regularly. When you have a consistent markup from your MSP, your overall rates become much lower when you accept enhanced data commercial credit card payments.


In summary, accepting B2B payments will save your business money when processed correctly. When accepting a level 2 or 3 commercial credit card payment, then passing it through the authorization process without the enhanced data, it can downgrade to level 1 (the level of consumer card transactions) then process at the higher rate. Specialized software that auto-populates the enhanced data fields is the most efficient way to facilitate B2B credit card processing when accepting a consistent volume of commercial credit cards. It is possible to enter all of the enhanced data manually into a payment terminal or online payment gateway, but it’s time-consuming, leaves room for error, and is really only viable for merchants who accept a handful of B2B transactions per year.


Setting up a B2B Merchant Account


Software upgrade costs vary, but usually come in the form of a monthly fee. The amount saved in B2B reduced interchange should cover the cost of the upgraded software and more.


Another qualifier for B2B merchants is their MCC (Merchant Category Code). The major card brands list MCC codes that eligible to be considered B2B merchants. The list is slightly different for each card brand. Your merchant account provider will first have to assign you the proper MCC code, ideally one that all the card brands agree on as B2B-eligible, before you can start processing B2B credit card transactions at the specialized low rate.


With a merchant account set up through Coastal Payment Systems, B2B credit card processing software automates the recognition, categorization and the pass-through of enhanced data in order to effortlessly accept commercial credit cards without missing the reduced rate. Each B2B payment processing solution includes automated invoicing, advanced online reporting, accounting reconciliation and recurring billing options, plus compatibility with third-party software applications. End-to-end integration support to make sure your business software is linked and working together is also included. Take advantage of next-day funding, 24/7 client support (including PCI compliance walk-throughs), and an adaptable payment solution designed for efficiency and growth.


Benefits of B2B Partnerships


A B2B credit card processing solution comes with many benefits:


  • Strengthens relationships with commercial cardholders who prefer paperless transactions.

  • Reduces your invoicing costs since invoices can be automated and sent electronically, or voided completely for level 3 payments since the enhanced data makes the invoice redundant.

  • Fosters predictable revenue.

  • Faster and reduces drawn-out collection efforts.

  • More comprehensive records and reporting.

  • Saves money, especially for high ticket transactions.

  • Our B2B gateway integrates with QuickBooks, QuickBooks Online, xero, Freshbooks and more accounting software making an more integrated solution.


Coastal Payment Systems will supply your business with the B2B payment processing gateway to save you time and money. Whether your business collects a single payment transaction or on a recurring billing cycle, we will show you lower payment processing costs and support you every step of the way. Contact us today for a free consultation and a side-by-side comparison of your current processing statement.



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