government contracts – Merchant Accounts

SEWP Contract Holders — Are You Accepting Government Purchase Cards Correctly?

sjadmin1 — Tue, 08 Sep 2026 16:39:43 +0000

For businesses that have recently been awarded a SEWP contract — NASA’s Solutions for Enterprise-Wide Procurement vehicle — the next step is getting set up to accept payment from federal purchasing agents. Most of those payments come by government purchase card. And while accepting a government purchase card looks straightforward on the surface, how that transaction is processed determines whether the SEWP contract holder is paying significantly more in interchange costs than necessary.

Winning a SEWP contract opens the door to federal business across every government agency. What most new SEWP contract holders are never told is that accepting the payment correctly — and at the lowest possible interchange cost — requires a specific merchant account setup that most processors don’t offer.

What Is a SEWP Contract and How Do Agencies Pay?

The SEWP contract is a Government-Wide Acquisition Contract administered by NASA that gives all federal agencies access to a pre-competed catalog of IT products, services, hardware, software, and support solutions. SEWP contract holders can receive orders from any federal agency — making it one of the most versatile contract vehicles available to IT vendors and technology companies.

Government contractors can receive federal payments in several ways, including ACH, wire transfer, and government purchase card.

Federal purchasing agents typically pay SEWP contract holders using government purchase cards — GSA SmartPay cards operating on the Visa and Mastercard networks. These cards pay quickly, typically settling in two to three business days, which is a significant cash flow advantage over traditional invoicing that can take 30 days or more.

The SEWP Program Fee

SEWP contract holders are required to pay a 0.34% program fee on all orders. This fee is built into quoted prices and paid to the NASA SEWP Program Management Office. It is separate from — and in addition to — the interchange cost of accepting the government purchase card payment itself. Understanding both costs is important for SEWP contract holders managing their margins on federal orders.

SEWP Contract Payment Processing — What Most Vendors Don’t Know

When a government purchasing agent pays a SEWP contract holder by purchase card, the transaction carries an interchange cost that the vendor absorbs. For most SEWP contract holders — particularly those new to government contracting — this cost is treated as fixed. It is not.

Visa and Mastercard created specific interchange programs for government purchase card transactions specifically to encourage vendors to submit detailed line-item data with each payment. When that data is submitted correctly, the interchange cost on eligible transactions can be reduced by 30 to 40 percent compared to a standard submission. When it is not submitted correctly — which is the case for the majority of government vendors — those savings are simply never realized.

For a SEWP contract holder regularly processing IT equipment, software licenses, or services paid by government purchase card, the difference between a correctly configured merchant account and a standard one can represent thousands of dollars per year in unnecessary interchange costs.

“There are extensive resources to help vendors win a SEWP contract. Almost nothing exists to help them understand what it costs to accept the payment — or how to reduce that cost once orders start coming in.”

Level 3 Processing for SEWP Contract Holders

Level 3 processing — now operating under Visa’s Commercial Enhanced Data Program (CEDP), also referred to as Product 3 — refers to the submission of detailed line-item transaction data with each eligible government purchase card payment. This data mirrors what would appear on an itemized invoice: purchase order number, item description, quantity, unit of measure, unit cost, tax amount, freight amount, and ship-to and ship-from postal codes.

When this data is submitted correctly on each eligible transaction, the transaction qualifies for a lower interchange category. The cost reduction can be substantial — and it applies to every eligible government purchase card payment processed under the SEWP contract.

Current Government Purchase Card Interchange Rates — August 2026

Rates are subject to change. SEWP contract holders should verify current rates with their processor.

Program	Threshold	Rate (August 2026)	Requirement
Non-Qualified	Any amount	2.95% + $0.10	Missing or incomplete data
Standard P-Card	Any amount	2.70% + $0.10	Basic transaction data only
CEDP Verified / Product 3	Any amount	1.75% + $0.10	Level 3 line-item data required
Visa GSA Large Ticket	$5,557.14 and above	1.20% + $39.00	Level 3 line-item data required

The difference between paying the non-qualified rate of 2.95% and the CEDP Verified rate of 1.75% on every eligible government purchase card transaction is significant. On $500,000 in annual government purchase card volume, that difference represents approximately $6,000 per year — simply from having the merchant account configured correctly.

SEWP Contract Large Ticket Transactions — A Program Worth Knowing

SEWP contracts frequently involve large individual orders — IT equipment, software licensing, and technology services with transaction values well above typical retail purchases. For SEWP contract holders regularly receiving government purchase card payments above $5,557.14, there is a separate Visa interchange program that offers even lower rates.

As of August 2026, the Visa GSA Large Ticket interchange rate is 1.20% + $39.00 per transaction for eligible transactions of $5,557.14 and above. For a SEWP contract holder processing a $20,000 IT equipment order, the difference between paying the standard P-card rate and qualifying for the GSA large ticket rate is meaningful on a single transaction — and compounds significantly across a year of federal orders.

Important for Large SEWP Orders

Qualifying for the Visa GSA Large Ticket rate requires Level 3 line-item data to be submitted correctly with each eligible transaction. The merchant account must also be specifically configured for this program. A SEWP contract holder whose merchant account is not set up for Level 3 will not qualify for the large ticket rate regardless of the transaction amount.

Surcharging on SEWP Contract Orders

Some SEWP contract holders ask whether they can add a surcharge to government purchase card transactions to offset interchange costs. Whether surcharging is permitted depends on the specific contract terms and agency requirements. Some agencies and contract structures permit a surcharge of up to three percent — others do not.

For SEWP contract holders where surcharging is not permitted or not practical, Level 3 interchange optimization is the primary tool for reducing the cost of accepting government purchase card payments. Reducing interchange from 2.70% to 1.75% through correct data submission effectively offsets a significant portion of the processing cost — without passing any additional charge to the purchasing agency.

What SEWP Contract Holders Should Verify About Their Payment Setup

Is the merchant account configured for Level 3 / CEDP data submission? Standard merchant accounts typically do not submit Level 3 data automatically. A specifically configured gateway is required.
Are the required data fields transmitting correctly on every transaction? Many accounts that support Level 3 are missing specific fields — such as the purchase order number — that are critical for interchange qualification.
Are transactions qualifying at the CEDP Verified / Product 3 rate? A statement review will show what interchange categories government purchase card transactions are actually clearing at versus what they should be clearing at.
Do large orders qualify for the Visa GSA Large Ticket rate? SEWP orders above $5,557.14 may qualify for 1.20% + $39.00 — but only with correct Level 3 data submission and proper account configuration.
Are there STND or EIRF charges on the processing statement? These indicate transactions that downgraded — meaning required data was missing and the transaction did not qualify for the lower available rate.

Revolution Payments and SEWP Contract Payment Processing

Revolution Payments has specialized in government contractor payment processing for over 25 years — including IT vendors, technology companies, and SEWP contract holders accepting government purchase cards from federal agencies across every department.

The interchange optimization programs that Visa and Mastercard created for government purchase card transactions have been available for decades — but most SEWP contract holders, particularly those new to federal contracting, are never shown how to take advantage of them. Getting the merchant account configured correctly from the start is significantly easier than identifying and correcting an interchange qualification problem after months of overpaying.

For SEWP contract holders who have recently been awarded a contract and are setting up payment processing for the first time — or who are already processing and want to confirm their current setup is working correctly — a no-cost statement review will show exactly where transactions are qualifying and whether there are opportunities to reduce interchange costs on government purchase card payments.

Recently Awarded a SEWP Contract?

Find out whether the merchant account is configured correctly for government purchase card acceptance — and whether Level 3 and GSA large ticket interchange rates apply to the orders being processed.

Call 888-790-3450 — Free Review

Surcharging Government Purchase Cards — What Government Contractors Need to Know

sjadmin1 — Fri, 28 Aug 2026 19:28:42 +0000

Some government contractors are permitted to do surcharging on government purchase card transactions. Whether doing so makes sense is a different question — and for contractors who choose not to surcharge, there is a path to significantly lower interchange costs that most processors never mention.

The question of whether government contractors can surcharge government purchase cards is coming up more frequently. In fact, Revolution Payments has recently spoken with multiple contractors whose government contracts permit a surcharge of up to three percent on purchase card transactions. Over the past 25 years working specifically with government contractors, the payment side of contract performance is still one of the least discussed — and most costly — areas that new and established contractors overlook.

Can Government Contractors Surcharge Government Purchase Cards?

A government contractor surcharge program allows a vendor to add a fee to the transaction when a government purchasing agent pays by purchase card. This fee is intended to offset the merchant’s cost of accepting the credit card — passing some or all of that cost back to the agency making the purchase.

Whether a government contractor can surcharge depends on the specific contract terms, the agency, and applicable regulations. Some contractors working with certain agencies are permitted to charge up to three percent. Others are not. Before implementing any surcharge on government purchase card transactions, the contract terms should be reviewed carefully and confirmed with the contracting officer.

Revolution Payments works with contractors in specific agencies where the purchasing office has confirmed they will accept a surcharge of up to three percent. In those situations, a properly implemented surcharge program can offset the majority of the processing fees a contractor would otherwise absorb. Understanding whether that applies to a specific contract is the starting point of the conversation.

GSA SmartPay guidance notes that A/OPCs should ensure card holders are aware of the possibility of surcharges when making purchases using GSA SmartPay charge cards. If a merchant is imposing a surcharge, the card holder may choose to consider another merchant that offers the same or similar item without the surcharge. This is an important competitive consideration for any government contractor evaluating a surcharge program.

Surcharging Government Purchase Cards — Why Competition Matters

Even when a government contractor surcharge program is permitted under contract terms, the decision to implement one involves more than just whether it is allowed. The competitive implications are real and worth understanding before proceeding.

Government purchasing agents who encounter a surcharge have the option to seek out another vendor offering the same or similar products or services without one. In a competitive procurement environment — where multiple vendors offer comparable capabilities — a surcharge can be a factor that moves business to a competitor. This is particularly relevant for contractors whose products or services are not highly differentiated or where the agency has multiple qualified vendors to choose from.

The Competitive Risk

A government contractor surcharge program that recovers three percent in processing costs may cost significantly more in lost contract value if purchasing agents consistently choose vendors who do not surcharge. The decision should factor in the competitive landscape, the nature of the contract, and whether the agency has readily available alternatives.

For contractors in specialized fields — where the agency has few qualified vendors — the competitive risk of surcharging may be lower. For contractors in more commoditized categories, the risk of losing business may outweigh the benefit of recovering processing costs through a surcharge.

“The decision to surcharge is not just about whether it is permitted — it is about whether the business can absorb the competitive risk of charging an agency more than a competitor would.”

When Surcharging Government Purchase Cards Isn’t the Right Fit

For government contractors who determine that surcharging is not the right fit — either because it is not permitted under their contract or because the competitive risk is too high — the more effective path to reducing the cost of accepting government purchase cards is through interchange optimization.

Visa and Mastercard created specific interchange programs for government purchase card transactions that significantly reduce the cost when the right transaction data is submitted. According to the GSA Federal Acquisition Service, by providing Level 3 data, a supplier may reduce their credit card processing fees — often by 30 to 40 percent. This cost reduction does not require surcharging the agency, does not create a competitive disadvantage, and is available on eligible transactions when the merchant account and transaction data are configured correctly.

What 30 to 40 Percent Actually Means

The GSA has published examples showing the real dollar difference. A $5,000 Visa transaction without Level 3 data costs approximately $139 (2.78%) in interchange. The same transaction with Level 3 data costs approximately $99 (1.98%). For contractors processing significant government purchase card volume, that difference compounds quickly across every eligible transaction.

Surcharging Government Purchase Cards vs. Level 3 — Understanding Your Options

For contractors permitted to surcharge up to three percent, the surcharge effectively passes the full processing cost to the agency. For contractors who optimize through Level 3 processing instead, the interchange cost itself is reduced by 30 to 40 percent on eligible transactions — meaning the contractor pays significantly less without passing any cost to the agency.

For contractors who choose not to surcharge government purchase cards, Level 3 interchange optimization reduces the underlying interchange cost without passing any additional charge to the government customer. That distinction matters — the contractor pays less, and the agency pays nothing extra.

GSA Large Ticket Interchange — A Program Most Contractors Don’t Know About

Beyond standard Level 3 interchange optimization, there is a separate Visa interchange program specifically for GSA large ticket transactions that offers even lower rates for eligible government purchase card transactions above a certain dollar threshold.

As of August 2026, the Visa GSA Large Ticket interchange rate is 1.20% + $39.00 per transaction for eligible transactions of $5,557.14 and above. These rates are subject to change — contractors should verify current thresholds and rates with their processor.

Program	Threshold	Rate (as of August 2026)	Data Required
Standard — No Level 3	Any amount	2.70% + $0.10	Basic transaction data only
Level 3 — Government Purchase Card	Any amount	1.90% + $0.10	Level 3 line-item data required
Visa GSA Large Ticket	$5,557.14 and above	1.20% + $39.00	Level 3 line-item data required

For a government contractor regularly processing transactions above the GSA large ticket threshold, the difference between paying standard interchange and qualifying for the GSA large ticket rate is significant. On a $10,000 transaction, standard interchange at 2.70% costs $270. The GSA large ticket rate at 1.20% + $39.00 costs $159 — a difference of $111 on a single transaction. At meaningful volume, that difference adds up to thousands of dollars per year.

Important

Qualifying for the Visa GSA Large Ticket interchange rate requires Level 3 line-item data to be submitted correctly with each eligible transaction. Without Level 3 data, the transaction will not qualify for the large ticket rate regardless of the transaction amount. The merchant account must also be properly configured for this program — simply accepting government purchase cards is not sufficient.

What Government Contractors Should Evaluate Before Deciding

Review contract terms first — confirm whether a surcharge is permitted under the specific contract and agency before implementing any government contractor surcharge program
Assess the competitive landscape — how many qualified vendors does the agency have access to, and how likely are purchasing agents to seek out non-surcharging alternatives
Understand the Level 3 opportunity — before surcharging, determine whether the merchant account is configured to submit Level 3 data correctly and whether interchange optimization alone would adequately reduce costs
Check transaction sizes against the GSA large ticket threshold — if transactions regularly exceed $5,557.14, the GSA large ticket interchange program may reduce costs significantly without any surcharge
Verify the current setup — many government contractors assume their account is configured correctly for Level 3 and large ticket programs. A statement review will confirm whether transactions are actually qualifying at the expected interchange levels

Revolution Payments and Government Contractor Payment Processing

Revolution Payments has specialized in government contractor payment processing for over 25 years. Government purchase cards — including GSA SmartPay cards — represent a meaningful portion of federal procurement spending, and contractors who are not set up correctly are paying more than necessary on every eligible transaction.

Whether the question is whether a government contractor surcharge program makes sense for a specific contract, or whether the current merchant account is configured to qualify for Level 3 and GSA large ticket interchange rates, a no-cost statement review will show exactly where transactions are currently qualifying and what options are available.

Accepting Government Purchase Cards?

Find out whether current transactions are qualifying at the right interchange level — and whether a government contractor surcharge program, Level 3 optimization, or GSA large ticket rates make the most sense for the contract and volume.

Call 888-790-3450 — Free ReviewNo obligation · No long-term agreements · Revolution Payments · 25+ Years Government Payment Experience

Won a Government Contract — Now What About Getting Paid Correctly?

sjadmin1 — Wed, 26 Aug 2026 16:40:12 +0000

For any contractor asking won a government contract now what — the answer almost never includes what to do about accepting payments correctly. Winning a government contract is a significant achievement — and the government contracting industry has built an entire ecosystem around helping businesses get there. SAM.gov registration services, proposal writers, CAGE number consultants, bid monitoring platforms, and procurement advisors all exist to help contractors win. But once a contractor wins a government contract, the question of how to accept the payment correctly is almost never addressed — and after more than 25 years in government payment processing, the gap is still as wide as it has ever been.

How Does the Government Pay Contractors?

Many government agencies pay contractors using Government Purchase Cards — also called GPCs or P-Cards. Many of these purchase cards operate on the Visa and Mastercard networks. They look like any other credit card on the surface, but they carry more capabilities, controls, and data requirements than a standard consumer card.

Accepting a government purchase card correctly is different from simply being able to run a credit card. The transaction must include specific line-item data that goes beyond what a standard credit card transaction captures — and the merchant account must be configured to submit that data automatically with each eligible transaction. Without that configuration, the card processes but the transaction does not qualify for the lower interchange rates that Visa and Mastercard created specifically for government purchase card transactions.

GSA Federal Acquisition Service

The U.S. General Services Administration describes Level 3 transaction data as an “electronic invoice” with line-item details — defining what is being purchased, how the sale takes place, who is involved, and when it takes place. The GSA notes that by providing Level 3 data, a supplier may reduce their credit card processing fees — often by 30 to 40 percent.

Won a Government Contract — Now What Happens With the Payment?

When a contractor wins a government contract and begins accepting government purchase cards, the assumption is usually that having a merchant account is sufficient. The card processes, the money arrives, and the transaction appears to have worked. What most contractors never find out is whether that transaction qualified correctly — or whether it cleared at a rate significantly higher than it needed to.

Visa and Mastercard created specific interchange programs approximately 30 years ago to encourage government vendors to submit additional line-item data with each purchase card transaction. The idea was straightforward — by entering more detailed information about what was purchased, how much was paid, and what the order number was, the transaction would qualify for a lower interchange rate. The government purchasing agent would receive better transaction data for reconciliation. And the vendor would pay less to accept the payment.

Thirty years later, according to Mastercard, 3 out of 5 government vendors are still not properly set up to accept government purchase cards — meaning they are not submitting the enhanced transaction data required to qualify for the lower interchange rates available on eligible transactions. Many who are set up are not receiving the full benefit because their account is not configured correctly. And most have no idea this is happening because nobody in the contracting process ever told them about it.

Being “properly set up” means more than simply having a merchant account that can run a credit card. It means the payment system is configured to capture and submit enhanced Level 3 line-item data with each eligible government purchase card transaction — information such as the purchase order or customer code, item description, quantity, unit of measure, unit cost, tax amount, freight amount, and ship-to and ship-from postal codes. Without this data submitting correctly on every eligible transaction, the lower interchange rates that Visa and Mastercard created for this purpose are not available.

Government vendors are still not properly set up to accept purchase cards in a way that qualifies for the lower interchange rates Visa and Mastercard created specifically for government transactions — even after 30 years of these programs being available.

What Happens When a Government Contract Vendor Is Not Set Up Correctly

When a government contractor accepts a purchase card without submitting the required Level 3 line-item data, the transaction clears at a standard interchange rate rather than the lower rate available for properly submitted government card transactions. The difference can be 30 to 40 percent of the interchange cost on that transaction — and it happens on every transaction, every month, for as long as the account remains incorrectly configured.

The contractor never receives a notice that this is happening. The statement shows the transactions processed. The money arrives. But the cost of accepting that payment is significantly higher than it should be — and the gap accumulates quietly over time.

What This Costs in Real Terms

A government contractor processing $500,000 per year in purchase card transactions who is not set up correctly may be paying significantly more in interchange costs than a contractor with the same volume whose eligible transactions are properly configured for Level 3 qualification. That difference is not driven by the processor’s rate — it comes from how the transactions qualify at the interchange level.

The Gap Nobody in Government Contracting Talks About

The government contracting industry has become sophisticated at helping businesses win contracts. There are platforms that monitor tens of thousands of bid sources daily, consultants who specialize in proposal writing and past performance documentation, and advisors who guide businesses through SAM.gov registration, CAGE numbers, and set-aside certifications.

None of that ecosystem addresses what happens after the contract is awarded and the first purchase card payment comes in. The assumption is that payment processing is a commodity — find a processor, get approved, and move on. For government contractors accepting purchase cards, that assumption is expensive.

“There are more resources than ever to help contractors win government business. The gap is on the other side — understanding how to accept those payments in the most economical way once the contract is in hand.”

How Government Purchase Card Interchange Programs Work

Visa and Mastercard created special interchange rates for government purchase card transactions to encourage vendors to submit detailed transaction data. When a vendor submits the required Level 3 line-item data with each purchase card transaction — including the purchase order number, item description, quantity, unit of measure, and other required fields — the transaction qualifies for a lower interchange category. The cost reduction can be 30 to 40 percent on eligible transactions compared to a standard submission.

GSA Example — Real Dollar Difference

The GSA Federal Acquisition Service published the following examples of the interchange cost difference:

Visa — $5,000 transaction: $139 (2.78%) without Level 3 data vs. $99 (1.98%) with Level 3 data
Visa — $3,000 transaction: $99 (3.30%) without Level 3 data vs. $75 (2.50%) with Level 3 data

Mastercard — $5,000 transaction: $147.50 (2.95%) without Level 3 data vs. $102.50 (2.05%) with Level 3 data
Mastercard — $3,000 transaction: $88.60 (2.95%) without Level 3 data vs. $77.58 (2.58%) with Level 3 data

These interchange programs are not something a contractor negotiates with their processor. Qualification is primarily driven by whether the account and transaction data are configured correctly to meet the applicable requirements.

What Level 3 Data Includes

Level 3 transaction data includes information that mirrors what would appear on an itemized invoice — purchase order number or customer code, item description, quantity, unit of measure, unit cost, ship-to and ship-from postal codes, tax amount, and freight amount. When this data is submitted correctly with each government purchase card transaction, the transaction has the best opportunity to qualify for the lower interchange rates Visa and Mastercard created for this purpose.

Won a Government Contract and Already Processing? Here’s What to Check

For contractors who have already won a government contract and are currently accepting purchase cards, the most important question is not what processor is being used or what rate was negotiated. The most important question is how those transactions are qualifying at the interchange level — and whether the account is configured to take advantage of the programs that exist specifically for government vendors.

Is the account configured for Level 3 data submission? Standard merchant accounts and credit card terminals typically do not submit Level 3 data. A Level 3 capable gateway or virtual terminal is required.
Is the purchase order or customer code field transmitting correctly? The PO number or customer code is one of the most critical fields for government purchase card qualification — and one of the most commonly missing.
Are transactions qualifying at the correct interchange category? A statement review will show what interchange level government card transactions are clearing at and whether there is a gap between what is being paid and what should be paid with correct configuration.
Is the processor experienced with government purchase card transactions? Processing a government purchase card is not the same as optimizing one. The processor’s experience with Level 3 configuration and government card interchange programs matters significantly.
Are there STND or EIRF charges on the statement? These codes on a processing statement indicate transactions that downgraded — meaning required data was missing or incorrect and the transaction did not qualify for the lower interchange rate.

What Government Contractors Should Know Before Accepting Their First Purchase Card

For contractors who have recently won a government contract and are setting up payment processing for the first time, the decisions made at setup determine how transactions will qualify — and what they will cost — for as long as that account is in place.

The processor’s quoted rate is one factor — but it is not the primary driver of cost for government purchase card transactions. Interchange qualification is. A contractor with a very competitive processor rate who is not set up for Level 3 data submission will pay significantly more per transaction than a contractor with a slightly higher processor rate who is configured correctly for government card interchange programs.

Getting Set Up Correctly From the Start

Level-3processing.com specializes in helping government contractors set up merchant accounts that are configured correctly for purchase card acceptance from day one — including Level 3 data submission, PO descriptor configuration, and the interchange optimization programs that Visa and Mastercard created specifically for government vendors. A review of the current setup or a new account configuration takes a matter of days.

The Programs Are There — Most Contractors Just Don’t Know About Them

The interchange programs that reduce the cost of accepting government purchase cards have been in place for approximately 30 years. They were created specifically to benefit government vendors. They do not require negotiation, special certification, or additional fees. They simply require that the merchant account be configured correctly to submit the right data with each transaction.

After more than 25 years working with government contractors, the most common situation encountered is a contractor who won a government contract, has been accepting purchase cards for years, paying standard interchange rates, and had no idea that a program existed that could have reduced those costs on eligible transactions. The money was there. The program was there. The setup just was not.

For any contractor who has recently won a government contract — or who has been accepting government purchase cards and has never had a statement reviewed for interchange optimization — a no-cost review will show exactly how transactions are currently qualifying and whether there is anything worth addressing.

Just Won a Government Contract?

Find out whether the payment setup is configured correctly for government purchase card acceptance — and whether transactions are qualifying at the interchange level available for properly configured government vendor accounts.

Call 888-790-3450 — Free Review No obligation · No long-term agreements · Revolution Payments or email info@ revolution-payments.com

How Government Contractors Can Reduce Credit Card Processing Fees

sjadmin1 — Thu, 24 Jul 2025 20:16:16 +0000

Even after the contract is awarded, many government contractors unknowingly overpay on credit card processing — not because of high processor rates, but because of how transactions are configured behind the scenes.

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:

Interchange Category	Requirements Met?	Typical Rate Range	Notes
Level 3	All required data + tax info	~1.15%–1.85%	Deepest discount — requires full Level 3 compliance
Level 2	Some enhanced data fields	~1.95%–2.25%	Requires tax amount, invoice, and customer info
Commercial Data Rate 1	Minimal data	~2.30%–2.70%	Default for many B2B merchants
Standard/EIRF	Missing or incorrect data	2.95%+	Penalty category — most expensive

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.

Payment Processing Fees for Government Contractors

sjadmin1 — Fri, 04 Apr 2025 19:22:56 +0000

In today’s competitive government contracting landscape, keeping overhead low is more important than ever. Yet, one hidden expense continues to chip away at margins — payment processing fees for government contractors.

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