As a business owner, you’re always looking for ways to streamline your operations and reduce costs. Credit card processing can help you do just that. But what is it exactly? And how can it benefit your business?
There are four different levels of credit card processing, and each has its own benefits and drawbacks. The level you choose will depend on your business’s needs and goals.
Level 1: Basic Credit Card Processing
This is the most basic level of credit card processing, and it’s typically used for small businesses with low transaction volume. Level 1 processing includes features like fraud protection and chargeback support.
Level 1 credit card processing is the least expensive and most common type of credit card processing. With this type of processing, businesses are only charged for the transaction amount, plus a small percentage of the card issuer’s fee. This type of processing is often used for small transactions, such as retail purchases.
Level 1 credit card processing is ideal for businesses that process a low volume of transactions each month. Level 1 cards are typically issued by major credit card companies, such as Visa, MasterCard, American Express, and Discover. Businesses that process a higher volume of transactions may want to consider level 2 or 3 processing, which offers lower per-transaction fees.
Level 1 credit card processing is the most common type of credit card processing and is often used for small transactions, such as retail purchases. Level 1 cards are typically issued by major credit card companies, such as Visa, MasterCard, American Express, and Discover. Businesses that process a higher volume of transactions may want to consider level 2 or 3 processing, which offers lower per-transaction fees.
Level 2: Intermediate Credit Card Processing
Level 2 processing is the term used to describe the processing of credit and debit card transactions. This type of processing is often used by businesses that process a large number of transactions on a daily basis. Level 2 processing allows businesses to save money on transaction fees by batching together multiple transactions into one larger transaction.
This type of processing can also help businesses improve their cash flow by reducing the amount of time that it takes to process each individual transaction. Level 2 processing is typically more expensive than level 1 processing, but it can be worth the extra cost for businesses that process a high volume of transactions.
Level 2 credit card processing is a merchant account pricing structure that offers businesses lower transaction fees for providing more detailed information about their credit card sales.
To qualify for level 2 processing, businesses must provide the following data with each transaction:
– The cardholder’s billing zip code
– The cardholder’s tax identification number (if available)
– The invoice number associated with the purchase
– The purchase order number (if available)
Level 2 credit card processing can save businesses significant money on their transaction fees, especially if they process a high volume of sales. For smaller businesses, level 2 processing may not be worth the extra effort required to provide the additional data. Speak to your merchant account provider to see if level 2 credit card processing is right for your business.
Level 3: Advanced Credit Card Processing
This is the most advanced level of credit card processing, and it’s typically used by businesses that require the most comprehensive features. Level 3 processing includes features like PCI compliance support and real-time reporting.
Level 3 credit card processing is the highest level of service available and is typically reserved for businesses with high transaction values, such as B2B companies. With this type of processing, you’ll receive the lowest possible rates from your processor and can avoid many common fees.
To qualify for Level 3 processing, you’ll need to provide detailed information about each transaction, including the invoice number, purchase order number, product code, and more. This level of service is best suited for businesses that have a dedicated accounting team to manage their transactions.
Level 4: Custom Credit Card Processing
This level is for businesses that have unique processing needs that can’t be met by any of the other levels. If you need a custom solution, you’ll work with your processor to develop a plan that meets your specific requirements.
Custom credit card processing is a process that allows you to customize your credit card processing to fit your specific needs. This can be a great way to save money on fees, get more control over your transactions, and even improve your customer service.
How to Choose the Right Level of Credit Card Processing for Your Business
When choosing a credit card processor, you need to weigh the cost of the service against the level of protection and service you need.
If you’re processing a small volume of transactions, a level 1 processor may be sufficient.
If your business processes a large number of transactions, then Level 2 could provide you with lower transaction fees, but you will need to provide more detailed information about the credit card sales.
If your business has a high transaction value and typically conducts business-to-business (B2B) transactions, then level 3 offers more benefits.
If Leve 1-3 does not provide you all the features and benefits that you need then Level 4 will allow you to work with a credit card processing company to customize your credit card processing system.
Once you’ve decided on the level of credit card processing you need, it’s time to compare processors. There are a few things to look for when comparing processors:
– Fees: Make sure you understand all the fees associated with the processor, including transaction fees, monthly fees, and early termination fees.
– Contract terms: Read the contract carefully to understand the length of the contract, the cancellation policy, and any other terms and conditions.
– Customer service: Check out the processor’s customer service policies and procedures. You should be able to reach a customer service representative 24/7 in case of an emergency.
– Security: Make sure the processor uses state-of-the-art security measures to protect your data. Look for features like encryption and fraud detection.
Once you’ve found a credit card processor that meets your needs, it’s time to sign on the dotted line. Be sure to read the contract carefully and ask any questions you have before you commit to anything.
If you would like to learn more about the different levels of credit card processing and which one could best suit your business’s needs and budget then Balanced Processing Partners can review your business structure with you and provide a variety of options that serve your business needs best.
Now that you know how to choose the right credit card processor for your business, you’re ready to start processing payments. Just remember to shop around and compare processors before you decide on one, and always read the fine print before you sign any contracts.