By Roger McNamara
Recently, I was having a conversation with a sales leader from one of the big ISOs. I asked, "So what is the merchant value your people are selling in B2B? There was a bit of a pause, and then the individual said, sheepishly, "Level II and Level III data." I probed further, asking,"Anything else you guys talk about?" This time there was a much longer pause; I could almost hear the person on the other end of the phone searching for an answer—but there was none.
I know the leader wanted to give me more, but it was just not there. As an ISO, does this conversation have a familiar ring to it? Is this what you are leading with on your B2B sales calls?
The origins of Level II and III data go way back to 1986, when the first purchasing cards were issued in the United States. Back then it was the U.S. government that was essentially the test bed for purchasing cards before they were finally rolled out to non-government merchants in the 1990s.
The issuers had a little problem in that they needed to pass on information that was contained on the purchasing orders (POs) they would now electronically be replacing. To get a supplier to pass on that data, they offered a rate reduction to encourage the process. In theory, it worked really well. In practicality, it was not always a home run. In some cases, businesses had the data but failed to pass it. In others they passed it to a processor who failed to pass it on. In some cases it worked as designed, but to say the benefits it delivered to suppliers were universal would be a stretch.
Much has not changed despite the passing of time. Granted, technology has assisted in some ways to make up for data that is not entered, but with a percentage of B2B spend on consumer cards, Level II and III data is a non-starter for this business volume.
Simply stated, the more data required for a transaction, the higher the level assigned to that transaction. Level III requires the most data and can provide the largest rate reductions. The three primary factors affecting whether a transaction qualifies for Level III interchange rates are if the card itself is eligible for Level III data, if you have provided all the information required, and if your gateway actually passed all the data that was provided. Those are three big ifs if you are leading with this as your main driver of merchant value in B2B.
Often, as ISOs, we are ingrained with the latest buzzwords from our Industry. After a while, these words roll off our tongues with little effort, designed to give prospects the belief that we are experts in our field. But are we always sure of the deeper meaning and effect on our prospects? For Instance, there are far greater value levers in B2B than Level II and III data rates for your B2B merchant. The problem is that they are not the typical buzz words we are always privy to, nor are they the easy buttons we sometimes seek to close business quickly.
Rather, the tools we need to close B2B merchants are not housed in a gateway that will prepopulate a field or add a sequential invoice number to get a rate reduction. The real value is in explaining to a supplier how credit can accelerate cash and deliver surprising operational efficiencies to a B2B supplier, along with a little-known tax benefit. To be sure, in the right circumstances with the correct information, eligible card and correct gateway, there is some additional value that can be realized for a merchant, but you would be remiss if you relied on this as your foundation for conversation.
Yes, B2B can be a little more complex. Yes, the sales cycle can be a little longer than that of a typical B2C, main street merchant that all your ISO competition and others are calling on too. And yes, you may have to up your technology game a little to play in this space. But the size of the accounts and the transactions they move through for you will more than satisfy your monthly residual cravings.
Educate and train yourself and your staff on the real value you can deliver a B2B merchant supplier. Paint a picture for them of the real pillars of value you can deliver, free from the smoke and mirrors of fancy buzzwords like Level II and III data. Getting outside of your comfort zone may take a little extra training, but when you do, you will find yourself in the $20 billion opportunity that is B2B.
Roger McNamara, president, Guide2Interchange LLC, is a 25+-year veteran of the payments industry, most recently as the director of business development with American Express in the United States. He has sold more than $200 billion worth of card processing and now leads a B2B merchant sales training organization. For more information, please visit Guide2Interchange@gmail.com.
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