The business world is changing the way it conducts business. In the past companies and government agencies worked exclusively with purchase orders and invoices. Today, more and more want their vendors to accept their regular credit cards or their purchasing (procurement) cards.

Across the country many of the Fortune 500 and smaller companies are looking for new ways to eliminate paperwork and lower the cost of processing small dollar purchases, from paper clips to computers. Many of them have found that the answer is providing their employees and purchasing departments with MasterCard and Visa purchasing cards. This year American businesses and government will spend over $500 billion purchasing small items and services. They are also developing preferred vendor lists, which consist of those companies setup to accept their credit cards.

The Federal Government uses a card called “GSA SmartPay” which was formerly called the I.M.P.A.C. which stood for International Merchant Purchase Authorization Card. The end of 1999 had mandated it by federal law that all federal agency small purchases (typically under $2,500 but often under $10,000) are purchased via the GSA SmartPay rather than via purchase order. There are currently over 250,000 IMPAC/SmartPay cards issued to government employees, accounting for over $3.5 billion in purchases over the past year. Government agencies are choosing to work with strategic suppliers, both large and small, who understand the advantages of doing business electronically. This helps reduce the cost and time involved in invoice preparation, government paperwork, and the effort involved in tracking down late payments.

What is Level II processing?

Level II processing includes all Level I information (merchant name, city/state/zip code, SIC and cardholder information) in addition to sales tax and a customer accounting code. If your credit card processing equipment is not programmed to prompt you to respond to the enhanced data prompts you will be billed non-qualified fees.

Benefits to Merchants Who Accept Purchasing Cards

• Increased Sales

As cardholders increasingly see the benefits of purchasing cards, they will seek suppliers who accept the card for payment of goods and services.

• Improved Cash Flow

Unlike the present method where a company may wait up to 60 days or more for payment, funds for purchasing card transactions are sent electronically through the banking system into the business checking account within three (3) days.

• Reduced Expense

Again, unlike the present method, a company does not have to process and mail invoices, manage and collect receivable, or post and process checks for each customer payment.

The Level II application provides corporations with more control over the purchasing process by capturing and transmitting additional information. These added data elements include:

• Separate purchase and sales tax amounts
• Customer code/number (e.g., an accounting code or purchase order number)
• Tax ID
• Merchant type
• Merchant category code (MCC)

How to Process Purchasing Cards

Frontline Processing offers a range of processing options including: Electronic Terminal Processing, PC Batch Processing and MO/TO Batch Processing.

PC Products: PC Charge

Terminal Equipment: Verifone, Hypercom, Nurit

Internet: Authorize.Net, PlugNPay

Level III Processing

Level III item detail was designed by MasterCard and Visa to support the demanding requirements of business-to-business and business to government credit card use. Level III item detail is provided electronically by the merchant and contains specific purchase information such as Item Description, Quantity, Unit Measure, Price, and more.

This information is very useful to corporate or agency personnel to help streamline business processes like accounting, audit and control, reconciliation and to merge payment data with finance and procurement systems.

Benefits for Buyers

• Transaction data is delivered online through the purchase card reporting system
• Reduces fraud, waste, abuse
• Supports small/disadvantaged supplier development initiatives
• Enhances merchant reporting
• Improves supply and commodity management
• Simplifies record keeping and accounting reconciliation
• Provides information for commercial card audits
• Integrates e-Procurement systems with supplier payments

_What are the differences between Level I, Level II, and Level III_

Level I - The standard financial information present on all credit card transactions including account number, expiration date, and amount of sale.

Level II – Represents sales tax paid and allows for the capture of a unique code to assist the cardholder to sort, reconcile and report transactions.

Level III – Represents line item information similar to what you might see on a cash register receipt. This information helps companies monitor and report on detail purchase behavior and can help ensure correct item quantity, unit price, shipping cost, and other item-specific information.

In addition, your program will prompt for Address Verification (AVS) data which includes the street address number (not name of street) and the zip code of the cardholder.

written by: Lori Robbins