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Interchange Optimization – What is It?

Diversified Payments is an Interchange Optimization for business to business transactions expert.
Interchange Optimization for business to business transactions.

Visa and MasterCard, along with card issuing banks, set the cost of interchange or the base cost to process a credit card transaction. There are over 300 levels of interchange with rates ranging from as low a .05% to as high as 3.25% and everything in between. What determines the cost of interchange is based on many factors, including benefits given to the cardholder and perceived risk.

At the high end of the interchange charts are business card products such as Business cards, Corporate cards and Purchasing cards. Perceived risk is the driving force behind the high fee structure for these cards. Therefore, a business that sells to other businesses or the government, and is getting paid with these cards, are most likely seeing very high processing fees month after month, cutting into profits. Unfortunately, a business cannot control the type of credit card presented for payment at any given time. However, business owners can control the fees associated with processing Business card products.

Risk is a prominent buzzword in the world of merchant services as banks look to protect the money they fund to business owners on behalf of their cardholders. Reduce the risk of a dispute or chargeback and the result can be a lower cost of interchange and higher profits.

To reduce the risk associated with business card products the Card Brands want to know more about the transaction and ask for Level 2 and Level 2 data points. Supplying Level 2 and Level 3 data when processing a Business card product will optimize the transaction and reduce the cost of interchange by up to 1.10%, helping to increase profits, as the sale looks more legitimate and less risky. If it were that easy.

The following are the Level 2 and Level 3 data points the Card Brands are seeking. To achieve the lowest cost of interchange, Level 3, all 6 fields of Level 2 data must be submitted.

Level 2

  1. Tax Amount

  2. Customer Code

  3. Merchant Postal Code

  4. Tax Identification

  5. Merchant Minority Code

  6. Merchant State Code

Level 3

  1. Ship from Postal Code

  2. Destination Postal Code

  3. Invoice Number

  4. Order Number

  5. Item Product Code

  6. Item Commodity Code

  7. Item Description

  8. Item Quantity

  9. Item Unit of Measure

  10. Item Extended Amount

  11. Freight Amount

  12. Duty Amount

As you can imagine, due to the amount of information required, as well as the type of information required, entering Level 2 and Level 3 data points often becomes a barrier for businesses for a variety of reasons. A business may not have the information to enter, the system to enter the information or the processor that can process the information. Therefore, the key is to find the right partner who has the tools and resources to remove the barrier and offers Interchange Optimization., offered by Diversified Payments, passes through Level 2 and Level 3 data points on every transaction ensuring the optimization of interchange and the lowest cost of interchange available. More importantly, we understand that due to the detail required, business owners cannot be expected to enter Level 2 or Level 3 information even on one transaction, as other companies expect. For that reason, we automatically pass through the line item requirements needed for a business to obtain Level 3 rates on the back end.

An added value to the gateway is our ability to deliver Interchange Optimization through different products, understanding that not every business is the same. Our virtual terminal is perfect for any business taking payment over the phone or in person. For businesses selling online we offer our Hosted Payment Page and Gateway API’s.

Studies show that accepting credit card payments for the sale of goods and services helps to increase sales. That doesn’t mean the cost must be a significant hit to the bottom line.

About Diversified Payments

Diversified Payments is a leading provider of payment processing and technology solutions, helping business owners navigate the world of credit card processing. We understand not every business is the same and create custom programs using added value solutions and cutting edge technology. Our focus is on helping businesses process payments in a more efficient, secure and affordable manner. We eliminate the guesswork and provide clear, concise and understandable solutions. Our core values are rooted in honesty, fairness and transparency.

Please visit for more information on our offerings.


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