If you’re wondering how government contractors can reduce credit card fees, it starts with understanding interchange — the non-negotiable base cost set by Visa and Mastercard. When P-Card transactions aren’t submitted correctly, contractors can lose out on 30% to 40% in savings before the processor even adds their fee.

Yet, 3 out of 5 contractors are still not set up to qualify for these lower rates.

That’s not because processors are doing anything wrong — it’s because most don’t specialize in this space and aren’t required to optimize interchange.
The result? Contractors unknowingly overpay tens of thousands per year.

1. Interchange Fees Are Not Set by Your Processor

In P-Card and B2B transactions, only 10–20% of your total cost is tied to the processor’s rate. The remaining 80–90% is dictated by interchange — which is determined by how the transaction is submitted, not who processes it.

2. 3 Out of 5 Contractors Are Not Set Up Correctly

Many contractors miss key configurations that are required to qualify for reduced interchange rates available on government and commercial card payments.

3. P-Cards Can Settle at One of Four Interchange Categories

These categories vary significantly in cost — sometimes by up to 1.5% per transaction — and qualification depends on meeting specific data and transaction requirements, not just the card type.

Here’s a simplified comparison:

4. Processors Are Not Required to Optimize Interchange

There’s no mandate for processors to ensure government contractors qualify for the most cost-effective interchange rates. Often, it’s simply overlooked due to how complex the rules are.

Even a rep with the best intentions could be costing a business thousands in unnecessary interchange fees — I see it every day.

Small misconfigurations, missing data fields, or the wrong rate structure can quietly add up to major avoidable costs over time.

5. “Level 3 Capable” Does Not Mean Interchange Optimized

Just because a system or gateway supports Level 3 data doesn’t mean your transactions actually qualify for Level 3 rates. Qualification depends on:

• Having the correct rate structure

• Proper data field mapping

• How the transaction is settled and batched

Final Thoughts

Credit card processing is often treated as a commodity — but for government contractors, how you accept P-Card payments can significantly impact your margin. Visa and MC created special interchange rates for Government P cards over 20 years ago yet most are not set up to take advantage of these rates.

By understanding how Visa and Mastercard structure interchange — and making sure your setup qualifies for the lowest possible rates — contractors can reduce credit card fees in ways most never consider.

Many contractors unknowingly pay far more than necessary, especially on Business-to-Business (B2B) and Business-to-Government (B2G) transactions, simply because their payment systems aren’t configured to qualify for lower interchange rates.

Why So Many Contractors Pay More Than They Should

If you accept corporate, fleet, or government purchasing cards, you might assume your processor is automatically giving you the best rates. The reality? Unless your system is passing Level 2 and Level 3 data, you’re likely paying standard interchange — and leaving significant savings on the table. Level 3 processing can lower the  payment processing fees for government contractors by up to 40%.

Visa and Mastercard offer special reduced rates for these types of transactions, but only when enhanced data is submitted during the transaction.

Most payment processors either don’t support this or haven’t properly set up contractors to take advantage of it. As a result, many businesses end up spending 30% to 50% more than necessary on processing costs.

What Is Level 2 and Level 3 Credit Card Processing?

These are enhanced data levels used in commercial transactions.
When you provide extra details like tax amount, invoice number, and product line items at the time of the sale, card brands see the transaction as lower risk and reward you with lower interchange rates.

The more data you submit, the better your pricing:

• Level 1: Standard consumer-level data

• Level 2: Business data (tax, invoice, etc.)

• Level 3: Detailed line-item information for government/commercial cards

How Contractors Can Reduce Processing Costs Without Extra Work

At Revolution Payments we’ve built tools that automatically handle Level 2 and Level 3 data submission behind the scenes — no manual input needed from your team.

We work exclusively with B2B and B2G contractors, helping you qualify for the lowest possible rates on every eligible transaction. The result? Substantial monthly savings with zero operational disruption.

The Cost of Not Being Set Up Properly

Data shows that 75% to 80% of government contractors are not configured to receive Level 3 pricing. That means most are paying far more than they should on every card transaction — without even realizing it.

If your company accepts GSA SmartPay or corporate purchasing cards, you could be missing out on savings of 1% to 1.5% per transaction.

The Fastest Way to Know If You’re Overpaying

We offer a free, no-obligation interchange analysis that benchmarks your current setup against the most favorable rates offered by Visa and Mastercard.

This audit reveals whether your business is leaving money on the table — and how much you could be saving. With the next round of interchange updates arriving this April and October, now is the perfect time to optimize.

Ready to Stop Overpaying?

If you’d like immediate insight into how much your business could save, you can:

• Upload a recent statement: Click here to submit securely

• Call us directly: 888-790-3450 if you have questions on payment processing fees for government contractors.

• Revolution Payments is a SAM-registered, CAGE-coded vendor that specializes in helping government contractors reduce their interchange costs with Level 3 processing