government purchase cards – Merchant Accounts

How Government Contractors Get Paid — And What It Costs When They Do

sjadmin1 — Tue, 01 Sep 2026 02:14:20 +0000

Understanding how government contractors get paid is one of the most practical — and most overlooked — aspects of doing business with the federal government. There are more resources than ever to help contractors win government contracts. The gap is on the other side: once the contract is awarded and the work is delivered, most contractors have never been shown how to get paid in the most economical way. That gap has existed for more than 20 years and it is still costing contractors real money on every eligible transaction.

There are countless programs and consultants that help businesses win government contracts. Almost none of them address what happens on the payment side once the contract is awarded — and that gap is costing contractors and vendors real money on every transaction.

How Government Contractors Get Paid — The Three Main Methods

Government contractors and vendors typically receive payment through one of three methods — wire transfer, ACH, or government purchase card. Each has different implications for cash flow, administrative burden, and in the case of purchase cards, the cost of accepting the payment itself.

Payment Method 1. Wire Transfer

Wire transfers are used for larger contract payments where speed is prioritized. The government initiates the transfer directly to the contractor’s bank account. Funds typically arrive within one to two business days once processed. Wire transfers carry no merchant processing cost on the contractor’s side — the full contract amount arrives without deduction.

The limitation is that wire transfers require manual initiation on the government’s side and are generally used for larger, less frequent payments rather than routine purchase transactions.

Payment Method 2. ACH — Automated Clearing House

ACH is the most common method for routine government contractor payments processed through standard invoicing systems such as the Invoice Processing Platform (IPP) for civilian agencies or Wide Area Workflow (WAWF) for DoD contracts. Once an invoice is approved, ACH payments typically arrive within one to three business days.

Like wire transfers, ACH payments carry no merchant processing cost — the contractor receives the full invoiced amount. The challenge with ACH through the standard invoicing process is that payment timelines depend on invoice approval, which can take 30 days or more under the Prompt Payment Act. During that window, contractors are effectively floating the cost of the work they have already performed.

Payment Method 3. Government Purchase Card — P-Card / GSA SmartPay

Government purchase cards — issued through programs such as GSA SmartPay — are used by federal purchasing agents to pay vendors directly at the point of sale or through an invoice payment process. Many of these cards operate on the Visa and Mastercard networks.

Purchase card payments offer a significant cash flow advantage over traditional invoicing — funds typically settle within two to three business days rather than waiting for the full invoice approval cycle. However, unlike wire and ACH payments, purchase card transactions carry an interchange cost that the merchant absorbs. How that interchange cost is managed determines how much of the contract value the contractor actually keeps.

The Cash Flow Advantage of Purchase Cards

GSA SmartPay guidance notes that purchase card payments improve vendor profitability by reducing payment time from 30 to 45 days on a traditional invoice to 2 to 3 days for electronic payment. For contractors and vendors managing cash flow across multiple contracts, that difference is significant — but it comes with an interchange cost that most have never been shown how to minimize.

How Government Contractors Get Paid by Purchase Card — And What It Actually Costs

When a government purchasing agent pays by purchase card, the contractor or vendor accepts the payment through their merchant account and the funds settle in two to three business days. What most contractors and vendors do not know is that the cost of accepting that payment — the interchange — is not fixed. It varies significantly depending on how the merchant account is configured and whether the right transaction data is being submitted with each payment.

Visa and Mastercard created specific interchange programs for government purchase card transactions more than 20 years ago. The intent was to encourage vendors to submit detailed line-item data with each transaction — and reward them with lower interchange rates when they did. 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.

“There are programs to help contractors win government business and programs to help them manage their contracts. Almost nothing exists to show them how to get paid in the most economical way once the contract is in hand.”

What Level 3 Processing Means for How Government Contractors Get Paid

Level 3 credit card processing refers to the submission of detailed line-item transaction data with each purchase card payment — information that mirrors what would appear on an itemized invoice. This includes 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.

When this data is submitted correctly with each eligible government purchase card transaction, the transaction qualifies for a lower interchange category. On eligible transactions, the difference can be 30 to 40 percent compared to a standard card submission. Across repeated government purchase card payments, that adds up quickly.

Level 3 processing is not something that happens automatically. The merchant account must be specifically configured to capture and submit the required data fields on each eligible transaction. Many contractors and vendors whose accounts technically support Level 3 are still not receiving the full benefit because the configuration is incomplete or the required fields are not transmitting correctly on every transaction.

Large Ticket Government Purchase Card Transactions — A Program Most Contractors Don’t Know Exists

For government contractors and vendors regularly receiving large purchase card payments, there is a separate Visa interchange program specifically for GSA large ticket transactions that offers even lower rates for eligible payments above a certain 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 (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
CEDP Verified / VL3V	Any amount	1.75% + $0.10	Level 3 line-item data required
Visa GSA Large TKT	$5,557.14 and above	1.20% + $39.00	Level 3 line-item data required

For a contractor receiving a $10,000 purchase card payment, the difference between a standard interchange rate and the GSA large ticket rate can represent $100 or more on a single transaction. At meaningful volume — multiple large purchase card payments per month — that difference is significant annual cost.

Important

Qualifying for the Visa GSA Large Ticket interchange 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. Simply accepting government purchase cards above the threshold is not sufficient — the account setup determines whether the lower rate is available.

Who This Matters For

This matters for any business that accepts credit card payments from the government. The opportunity is not limited to one industry, one type of contractor, or only large-ticket transactions. If a federal, state, municipal, military, institutional, or government-related buyer is paying by purchase card, commercial card, or government card, the way that transaction is submitted can directly affect the interchange cost.

Level 3 processing can apply to eligible government and commercial card payments when the merchant account and gateway are configured correctly and the required transaction data is submitted properly. For businesses that also receive larger government card payments, there may be an additional opportunity to qualify for large ticket interchange programs. But the first step is the same: confirming whether the account is actually set up correctly and whether transactions are clearing at the best available interchange category.

What Government Contractors Should Know About Getting Paid Correctly

Understanding how government contractors get paid is only part of the picture. Understanding what it costs — and how to reduce that cost — is where most contractors are missing out. Here is what to verify regardless of how long a contract has been in place:

Is the merchant account configured for Level 3 data submission? Standard merchant accounts and credit card terminals typically do not submit Level 3 data automatically. A Level 3 capable gateway is required and must be properly configured.
Are the required data fields actually transmitting on every transaction? Many accounts that technically support Level 3 are missing specific fields — such as the purchase order or customer code — that are critical for interchange qualification.
Are purchase card transactions qualifying at the expected interchange level? A statement review will show what interchange categories transactions are actually clearing at — not what they should be clearing at based on the account setup.
Do large purchase card payments qualify for GSA large ticket rates? Transactions above $5,557.14 may qualify for the Visa GSA Large Ticket interchange rate of 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 codes indicate transactions that downgraded — meaning required data was missing and the transaction did not qualify for the lower interchange rate available.

How Revolution Payments Approaches Government Contractor Payment Processing

Revolution Payments has specialized in government contractor and vendor payment processing for over 25 years. The interchange optimization programs that Visa and Mastercard created for government purchase card transactions have been available since the program launched — but more than two decades later, most contractors and vendors are still not set up correctly to benefit from them.

Some are set up but not configured in a way that actually generates the interchange savings the program was designed to provide. That is the gap that Revolution Payments was built to address — not just getting a merchant account approved, but making sure government purchase card transactions qualify correctly on every eligible payment.

For any contractor asking how government contractors get paid — and more specifically, how to reduce what it costs when they do — a no-cost statement review will show exactly where purchase card transactions are currently qualifying and whether there is anything worth addressing.

Accepting Government Purchase Cards?

Find out whether purchase card transactions are qualifying at the right interchange level — and whether Level 3 or GSA large ticket rates apply to the volume being processed.

Call 888-790-3450 — Free Statement Review No obligation · No long-term agreements · Revolution Payments · 25+ Years Government Payment Experience info@ revolution-payments.com

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.

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

Government Purchase Card PO Descriptor — What VA Vendors Need to Know

sjadmin1 — Tue, 25 Aug 2026 19:12:43 +0000

For vendors accepting government purchase cards from federal agencies such as the Department of Veterans Affairs, properly capturing and transmitting purchase order information can be an important part of both transaction reconciliation and Level 3 interchange qualification. The challenge is that simply having a gateway that supports Level 3 does not necessarily mean every required data field is being captured and transmitted correctly. Purchase order or customer-code information must be properly mapped through the payment environment — and merchants should verify how that information is being transmitted rather than assuming the account is configured correctly.

What Is a Government Purchase Card PO Descriptor?

A government purchase card PO descriptor refers to the Purchase Order number or Customer Code that is transmitted electronically with a credit card transaction as part of the Level 3 data submission. When a federal agency purchasing agent uses a government purchase card — also called a G-Card or GSA SmartPay card — including this information with the transaction supports the auditing and reconciliation processes that agencies use to manage purchase card spending.

This field must be enabled and configured correctly in the merchant’s payment environment. Without it, the transaction may still process — but the purchasing agent’s ability to automatically reconcile the charge in their procurement system can be affected.

Why This Matters for VA Vendors

When a VA purchasing agent uses a government purchase card, PO and transaction information can be used as part of the agency’s reconciliation process to associate card charges with the appropriate purchase or obligation. When the PO information is transmitted correctly with the transaction, that reconciliation process is more straightforward. When it is not, the purchasing agent may need to manually research and reconcile the charge — which creates additional administrative work on the agency’s side. Vendors whose transactions reconcile cleanly are generally easier to work with from an agency procurement standpoint.

Three Reasons the Government Purchase Card PO Descriptor Matters

The government purchase card PO descriptor affects vendors selling to federal agencies in three meaningful ways — each with real operational or financial consequences.

Reason 01

Level 3 Data Is in Demand by Federal Buyers

The GSA SmartPay program encourages government card transactions to include detailed line-item data to support agency auditing and reconciliation. Visa and Mastercard created special interchange rates to encourage vendors to submit this additional data — and the Purchase Order number or Customer Code is one of the most important fields in that submission.

When this data is submitted correctly, merchants can reduce interchange costs by 30 to 40 percent in many cases compared to a standard submission. The PO descriptor is a critical part of qualifying for those lower rates.

Reason 02

Transaction Reconciliation Inside Federal Procurement Systems

When a VA purchasing agent places an order, a matching obligation is typically created in the agency’s internal procurement database. At the end of the billing cycle, the agency’s system attempts to match card statement charges to open purchase orders. The PO information transmitted with the transaction is what makes that automated match possible.

Without the PO information — the purchasing agent may need to manually research each unmatched charge to determine which transaction corresponds to which purchase order, creating additional administrative work
With the PO information transmitted correctly — the agency’s system can match the charge to the open purchase order automatically, with no manual intervention required

Reason 03

Interchange Qualification — Savings or Missed Opportunity

Visa and Mastercard created special interchange rates to encourage vendors to submit enhanced data with government card transactions. When the government purchase card PO descriptor and other required Level 3 fields are submitted correctly, transactions can qualify for significantly lower interchange rates — reducing costs by 30 to 40 percent in many cases.

When required data fields are missing or incomplete, transactions may not qualify for the optimized interchange category. The PO descriptor is one of several fields that affect qualification — missing it is one common reason government card transactions fail to qualify for the lower rates available to vendors who submit complete data.

“Simply having a gateway that supports Level 3 does not mean every required data field is being captured and transmitted correctly — including the PO descriptor that federal purchasing agents need for reconciliation.”

How the Government Purchase Card PO Descriptor Works in Practice

When a government purchasing agent places an order, they typically provide a Purchase Order number or Customer Code. This information needs to be captured at the time of the transaction and transmitted through the payment environment as part of the Level 3 data submission.

The payment system — whether a virtual terminal, integrated gateway, or compatible point-of-sale environment — is responsible for capturing and transmitting this field. Not all payment environments are configured to handle this correctly even when they technically support Level 3 data, and the government purchase card PO descriptor field must be specifically enabled and mapped to capture the information on each transaction.

What Many Vendors Discover Too Late

Many vendors assume their account is configured correctly because their processor indicated Level 3 support. In practice, support for Level 3 data and correct configuration of every required field — including the government purchase card PO descriptor — are two different things. The only reliable way to confirm the PO information is transmitting correctly is to verify it on a live or test transaction rather than relying on the processor’s general assurance that Level 3 is enabled.

Government Purchase Card PO Descriptor Considerations for VA Vendors

The Department of Veterans Affairs has detailed purchase card auditing and reconciliation processes. VA purchasing agents work within internal systems that are designed to match card statement transactions to open obligations and purchase orders.

For vendors selling to the VA, ensuring that the government purchase card PO descriptor is transmitting correctly is a practical consideration — both for making the purchasing agent’s reconciliation process smoother and for maximizing the opportunity to qualify for Level 3 interchange rates on eligible transactions.

Practical Consideration for VA Vendors

Vendors selling to the VA should confirm with their processor or payment environment provider that the PO or Customer Code field is enabled, configured, and transmitting correctly on government card transactions. This is worth verifying directly rather than assuming it is working because Level 3 is generally supported.

How to Confirm the Government Purchase Card PO Descriptor Is Working

The most reliable way to confirm the government purchase card PO information is transmitting correctly is to run a test or live transaction and verify the resulting transaction data with your payment provider. If the setup is intended to display the PO number on the purchasing agent’s card statement, that should also be specifically tested and confirmed — how PO information appears in the transaction data versus on the cardholder statement can vary depending on how the payment environment is configured.

Verify the payment environment supports Level 3 data submission — not all payment setups transmit enhanced data fields even when technically capable
Confirm the PO descriptor field is enabled and mapped — general Level 3 support does not guarantee every field is active and configured
Test a transaction and review the statement — confirm the PO number appears correctly rather than assuming
Check processing statements for interchange qualification — if government card transactions are not qualifying at enhanced data rates, it may indicate required fields are not transmitting correctly
Ask your processor specifically — can the PO number provided by the purchasing agent be captured and transmitted dynamically on each transaction

What Correct Government Purchase Card PO Descriptor Setup Looks Like

A properly configured government purchase card account captures the PO number or Customer Code at the time of the transaction and transmits it as part of the Level 3 data submission. The field populates based on what the purchasing agent provides for each transaction — not as a static value that is the same on every charge.

Revolution Payments configures government contractor merchant accounts with Level 3 data submission in mind — including the government purchase card PO descriptor field. Accounts are reviewed to confirm that the required data fields are transmitting correctly and that government card transactions have the best opportunity to qualify at Level 3 interchange rates.

For government contractors who are already processing and unsure whether the government purchase card PO descriptor is configured correctly — a statement review can help identify whether transactions are qualifying at the interchange level expected for properly submitted government card data.

Selling to Federal Agencies Including the VA?

A statement review can help confirm whether government purchase card transactions are submitting PO descriptor information correctly and qualifying at the interchange level available for properly configured government card accounts. 888 790 3450 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.

Do You Accept Government Credit Cards

sjadmin1 — Thu, 01 Aug 2024 19:21:48 +0000

Do You Accept Government Credit Cards… If not, you are most likely missing opportunities you didn’t even know about.

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

How I saved this government contractor over $4,600 per month in fees w/o changing their rate

sjadmin1 — Thu, 16 Jun 2022 18:54:47 +0000

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

Government contractors Why pay 2.70% vs 1.9%?

sjadmin1 — Fri, 19 Mar 2021 20:48:09 +0000

Government contractors Why pay 2.70% vs 1.9%? With the many challenges facing contractors today, it’s no wonder that they 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.

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