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.

Although commonly referred to as the federal contracting market, it’s more accurately described as the federal purchasing market. Why? Because not everything the government buys requires a formal contract. In fact, the most common purchasing method for the government mirrors that of everyday consumers: using a credit card. Last year alone, government buyers made over 95 million credit card transactions, totaling approximately $29 billion.

Chances are, your business is better equipped to accept credit card payments than navigate the lengthy and complex process of securing a federal contract. However, the challenge lies in the fact that these credit card purchases are not posted for bid—they aren’t announced, competed for, or advertised. Despite this, government buyers make these transactions over 250,000 times daily.

If you’re interested in tapping into this hidden market of federal credit card purchases, give us a call today.  Aside from gaining new opportunities, Visa and MasterCard have created special interchange rates (level 3 credit card processing) for accepting government purchase cards. This program, when set up properly, this can save you 30%-40%.

Questions? Call 888 790 3450 or email info@ revolution-payments.com

With the many challenges facing contractors today, many have relied on their banks to set-up their credit card processing. It’s regrettable that many in the contracting industry are unaware of the advantages that correct processing solutions can present.

Many years ago MasterCard and Visa have created special interchange rates to support purchase card programs by reducing the supplier’s transaction costs if Level III line item detail is entered when processing a transaction.

Level III processing can lower the supplier’s discount rate by as much as 1.0% – 1.5% when compared to non-Level III credit card processing, depending on the card type and the size of the transaction.

These special rates are intended to be an incentive to pass Level III, which in turn will assist buyers in managing their purchase card programs Even with the considerable advantages a contractor can receive from level III processing, it is used infrequently.

In fact, statistics show us at level 3 out of 5 contractors are not set up to accept purchasing cards properly.

The fees for accepting credit cards are a part of doing business however, having an understanding of rates and the fees that impact your bottom line will empower you to may more informed decisions Questions? Give us a call 888 790 3450 info@revolution-payments.com www.revolution-payments.com

It’s regrettable that many in the contracting industry are unaware of the advantages that correct processing solutions can present.

To support acceptance of corporate & gov P-cards, MC & Visa have reduced interchange rates associated with these cards if Level-2 & Level-3 data is included in the transaction report.

Revolution Payments developed the level III processing technology to help contractors meet these requirements resulting in qualifying for MasterCard and Visa’s lower rates.

These reduced rates are passed on to the contractor dramatically lowering their fees and saving in many cases as much as 50% on our clients processing fees.

It has been our experience that the vast majority of contractors (75 to 80%) that engage in B2B and B2G processing are not aware of or properly set-up to take advantage of MasterCard and Visa’s special rates on the Corporate and Purchase Card programs.

Questions? Give us a call at 888 790 3450

Receive your free no obligation complimentary confidential analysis email a recent statement to info@ revoution-payments.com