Despite their differences, Visa and MasterCard have many similarities pertaining to payment processing. Submitting tax data is an important issue. As this blog has mentioned in the past, companies that sell to businesses with tax exempt certificates or to government agencies will need to submit a zero value tax amount because these customers won't be paying sales tax. Because many companies use tax exempt certificates, this is likely to come up often for vendors that conduct B2G and B2B sales.
MasterCard and Visa have very clear specifications when it comes to submitting tax information. To qualify for Visa Level 3 or MasterCard Data Rate 3, the tax value has to be greater than or equal to zero. So, businesses can still qualify for these rates if the tax value is at $0, provided that line item detail is processed in order to attain this level. The caveat here is that Level 2 and Data Rate 2 processing requires a tax value greater than zero.
Essentially, if a vendor processes a transaction with a $0 tax value, it can submit line item detail to qualify for the lowest possible rate. However, if that information isn't included, failure to submit tax info disqualifies the vendor from Level 2 or Data Rate 2, which means it will have to pay an even higher rate. In other words, when accepting commercial card payments, it's always important to submit line item detail to qualify for the lowest Interchange rate.
Working with a B2B payments consultant can help vendors obtain a better understanding of these concepts and acquire the tools needed to qualify for the lowest possible rate on all transactions.