That gap costs contractors real money, every single month, without most of them ever realizing it.

Why Government Contracting Content Skips Right Past This

A search for “how to win a government contract” turns up thousands of guides, courses, and consultants. A search for “how to get paid correctly on a government contract” thins out fast. The payments side of government contracting gets treated as an afterthought — something contractors set up once with whatever bank or processor is convenient, then never revisit.

That’s exactly the problem. Government purchase cards don’t process the same way as a typical retail transaction, and an incorrectly configured account pays more than necessary on every single transaction, every single month, indefinitely.

The Real Cost Isn’t the Processor’s Rate — It’s Interchange

Most contractors shop for a payment processor the same way they’d shop for office supplies: compare the rate, pick the lowest number. But the processor’s rate makes up the smallest piece of the total cost.

Every transaction has three components.

Interchange makes up roughly 80-90% of the total cost. Visa and Mastercard set interchange, the card-issuing bank collects it, and the rate stays the same no matter which processor a contractor uses.

Card brand assessments stay small and fixed, identical across processors.

Processor markup is the only negotiable piece, and usually the smallest slice of the bill.

A contractor negotiating hard on rate while ignoring transaction configuration is negotiating the tip on a restaurant bill while ignoring the cost of the meal.

What Level 3 Processing Actually Does for Government Contractors

Government purchase cards function as sophisticated procurement tools, not just plastic. They carry spend controls, reporting requirements, and — most importantly for the bottom line — access to special interchange categories that most vendors never use.

Visa and Mastercard created Level 3 interchange rates specifically to reward vendors who transmit detailed line-item data with each transaction: product description, quantity, PO number, freight amount, and more. Correct submission of that data qualifies the transaction for a significantly lower interchange rate. Missing or incorrect data sends the transaction into a much higher category, and the contractor pays the difference without ever seeing it explained on the statement.

According to Mastercard, 3 out of 5 vendors are not properly set up to accept government purchase cards — meaning the majority pay more than necessary on every eligible transaction, often without realizing it.

A properly configured account using Level 3 processing can reduce interchange costs by 30-40% compared to a non-optimized setup. On meaningful monthly volume, that adds up to thousands of dollars a month sitting unclaimed.

The Fastest Way to Know What’s Actually Being Paid

Confirmation that an account is “set up for Level 3” doesn’t guarantee it’s actually working. Required fields can go missing. Data can carry the wrong format. Settlement timing can fall outside the required window. Any one of these silently bumps transactions back into a higher-cost category, and only a look at the actual data behind the statement reveals the truth.

A government contractor who hasn’t had their payment setup reviewed since first accepting purchase cards likely leaves money on the table right now.

A line-by-line interchange audit shows exactly what a contractor pays, what they should pay, and where the gap comes from. Either everything checks out as correctly configured, or the audit reveals precisely how much the misconfiguration costs every month.

Questions? Call Revolution Payments at 301 790 3450 or email info@ revolution-payments.com