A Complete Guide to B2B Payment Processors

Payment processors come with a specific cost as they interact with multiple entities to complete a transaction. B2B organizations consider this expense as the ‘cost of doing business’ because it is necessary to leverage a payment processor to offer their customers payment flexibility. 

Let us break down the payment processing costs to understand individual cost elements. According to an article by American Express, payment processing costs can be divided into the following types:

1. Flat Fees

Flat fees are a monthly expense for using the payment processor.

2. Transaction Fees

The transaction fees vary depending on the transaction type. This transaction fee has three components: mark-up fee, assessment fee, and an interchange fee.

Sometimes, there is a third cost element associated with payment processing which is known as incidental cost. Usually, the payment processing costs are high as all the cost elements vary on a case-by-case basis.

How to Reduce Payment Processing Costs?

Among the various cost components of payment processing, interchange rates can be reduced if the transaction is processed at a higher security level such as Level III.  

Below are the various levels of data in ascending order of their security:

In simpler words, Level III data provides maximum transaction-related information as a result of which, the issuer is assured about the authenticity of the transaction. So, Level III data translates to a higher security and lower interchange rates.    

HighRadius EIPP Cloud helps organizations to leverage Level III data to subsequently reduce interchange fees. EIPP Cloud integrates your ERP with the processor and the bank. You can achieve up to 120 basis points reduction in interchange fees by processing Level III data.