B2B Payments

Efforts Grow To Get Suppliers On Board With Cards


Corporates want to pay their suppliers with commercial cards in order to rack up those points. But only 9 percent of suppliers say commercial cards are their preferred method of payment. The cost of accepting cards and the friction associated with onboarding to a card network can be too much to bear, especially for smaller vendors.

But a new report from card processing advisory firm CardFellow pushes for card acceptance by suppliers by shedding light on how to reduce the financial burden of card acceptance.

“People are told that it’s very expensive to accept a credit card issued to a business, and that’s just not the case,” argued CardFellow Founder and President Ben Dwyer in a statement, adding that the report released acts as a guide for vendors to understand how they can process commercial cards for a cost comparable to consumer cards.


It’s All About Data

As Dwyer and CardFellow explain, the best way to reduce the cost of commercial card acceptance is by upgrading processing level.

“Credit card processing isn’t cheap, but if a business can take a simple step, like providing enhanced data, and end up saving 1 percent or more, it’s a no-brainer.”

This means suppliers need to require level 2 or level 3 processing, meaning they need to collect more information about the corporate payer at the time of the transaction. As CardFellow noted in its report: “The greater the data level of a transaction, the lower the interchange cost associated with the transaction.”

A commercial card transaction can be charged lower interchange rates when level 2 or level 3 processing occurs. But each credit card issuer has a different set of requirements for the type of data companies need to collect to qualify for each level.

For instance, Visa requires information including discount amount, freight and shipping amount, duty amount, product code, quantity, unit of measure and more for level III interchange costs. In another example offered by CardFellow, Mastercard requires information on tax amount, tax indicator, customer code and tax ID to qualify as a level II transaction.

Suppliers need to be well-versed in the type of data required to qualify for each level, CardFellow warns, but adds that some card issuers can help suppliers streamline the data collection process by supporting auto-fill fields in virtual portals at the time of the transaction. But, the company warned, suppliers need to take the lead in ensuring they can capture this data.

“You need to know what you’re looking at and how to optimize it,” explained Dwyer. “In the case of enhanced data, processors aren’t incentivized to help you set it up, because it doesn’t benefit them if you save money.”


Can Suppliers Be Convinced?

As Dwyer and CardFellow pointed to, card issuers do not spell out for suppliers how to be charged less for accepting commercial cards. While data collection and higher-level processing can reduce interchange costs for vendors, the burden then shifts from a financial one to one that requires time and resources to set up data collection capabilities. For suppliers, especially smaller ones, it may not be worth the effort.

But corporates continue to seek ways to pay with commercial cards, and CardFellow isn’t the only firm exploring how to boost card acceptance. Earlier this week, MineralTree and Visa announced a partnership to streamline B2B payments via commercial card, a venture MineralTree CEO BC Krishna told PYMNTS acknowledged the challenge for suppliers to accept this form of payment.

And last year, Revolution Payments launched a new B2B payment gateway to lessen the financial burden of interchange fees on suppliers by streamlining the data entry and collection process to reach level II and level III processing standards.

Still, the market remains tasked with convincing suppliers that accepting commercial cards, as proponents argue, doesn’t have to be such a heavy financial burden and can help grow business by supporting the payment preferences of more potential customers.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

Click to comment