July 22, 2021

Level 3 Data

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If you sell products or services to other businesses or government agencies, you can qualify for lower processing rates with Level 3 data. Find out how.

Level 3 credit card processing gives your business the lowest rates. If you qualify, you can reduce rates by 1% - 1.5%.

If you're not too familiar with processing terms, this probably sounds confusing. So, let's explain what exactly Level 3 processing is and how you can qualify.

What Is Level 3 Data Processing?

Level 3 processing is used for B2B (business to business) and B2G (business to government) transactions. It requires detailed line-item information to process the transaction.

Because there's more data involved, there's less risk of fraud or chargebacks. So, in exchange, you can reduce interchange rates up to 1.5%.

This is mainly used for card-not-present transactions, such as invoicing, recurring billing, and online payments. These kinds of transactions are more typical for B2B and B2G purchases.

How to Qualify for Level 3 Processing

To qualify for Level 3 data, you need these three things.

  1. A card that's Level 3 eligible. This applies to corporate, purchasing, and government cards.

  2. You must fill in all the extra required line-item details. We'll go over what they are in the next section.

  3. A payment gateway that supports Level 3 processing. It must be able to accept and send line-item details. You may need to update your gateway or switch providers.

You also need to be on an interchange-plus pricing model, where the interchange rate and provider markups are clearly separated. This way, you benefit from the lower interchange rates. In other words, you cannot get Level 3 processing with providers like Square.

Level 1, 2, and 3 Data Required

The different levels of processing depend on the type of card used and how much information you collect. When you provide more data about the customer and purchase, you can get a lower interchange rate.

Here's what each level means and requires:

Level 1
Level 1 applies to basic transactions, whether that's to regular consumers or B2B. Level 1 transactions are charged the standard interchange rates. You only need to provide:

  • Credit card number
  • Expiration date
  • Billing address ZIP code
  • Purchase amount and date

Level 2
Level 2 applies to B2B transactions - usually if your customers are small to midsize businesses. Corporate, purchasing, and business cards can be eligible. Level 2 requires more data and offers a rate reduction, but not as much as Level 3.

In addition to everything in Level 1, you need to provide:

  • Sales tax amount
  • Merchant tax ID number
  • Merchant ZIP code
  • Customer's accounting code (for purchasing cards)
  • Invoice number
  • Order number

In most cases, Level 2 transactions can be processed with a standard point of sale or gateway.

Level 3
Level 3 processing is usually for B2B and B2G transactions that deal with large corporations and government agencies. It offers the lowest interchange rates if you provide detailed line-item information.

In addition to everything in Level 1 and 2, you need to provide:

  • Product/SKU codes
  • Product/service descriptions
  • Order/ticket number
  • Unit price
  • Quantities
  • Extended item price
  • Tax rate applied
  • Debit or credit indicator
  • Discount amount
  • Shipping amount
  • Duty amount
  • Units of measure

To process Level 3 transactions, you need a specialized payment gateway that's equipped to handle these extra data fields. It's important to work with the right merchant account provider that supports Level 3 processing.

Benefits of Level 3 Data

Entering in all that data may seem like too much work. But here are some good reasons to strive for Level 3 processing (if you qualify).

Lower processing rates
The biggest benefit is reducing your interchange rate. Typically, you can reduce rates around 1%, and even up to 1.5%. This difference can really add up when you're charging thousands to your corporate or government clients.

Faster processing
Level 3 transactions are processed faster since there's detailed information reported. Typically, you can be paid in 12 hours instead of the usual 1-2 days.

More secure
Because you're required to provide so much data, Level 3 transactions have less risk of fraud of chargebacks.

More trust for your clients
A lot of corporations and government agencies only use Level 3 corporate, purchasing, or government cards. If you can't accommodate that, that could mean less business for you.

Visa Level 3 Data Interchange Rates

So what kind of interchange rates can you expect if you qualify for Level 3 processing?

Here are Visa's current Level 3 data interchange rates, as of April 2021.

Visa Level 3 Data Rates
Corporate & Purchasing1.90% + 10¢
Large Ticket Corporate & Purchasing ($8,725+)1.45% + $35
Large Ticket Government ($5,984+)1.20% + $39

In comparison, a standard card-not-present transaction with a Visa Corporate card has an interchange rate of 2.70% + 10¢, while the rate for a Level 2 Corporate card transaction is 2.05% + 10¢.

Mastercard Level 3 Data Interchange Rates

Here are Mastercard's current Level 3 data interchange rates, as of April 2021.

Mastercard Level 3 Data Rates
Corporate, Purchasing & Fleet1.80% + 10¢
Business Card L11.75% + 10¢
Business Card L21.91% + 10¢
Business Card L31.96% + 10¢
Business Card L42.06% + 10¢
Business Debit Card1.80% + 10¢
Large Ticket Corporate, Purchasing, & Fleet ($7,254+)1.25% + $40
Large Ticket Business Card L1 ($7,254+)1.20% + $40
Large Ticket Business Card L2 ($7,254+)1.36% + $40
Large Ticket Business Card L3 ($7,254+)1.41% + $40
Large Ticket Business Card L4 ($7,254+)1.51% + $40

In comparison, a standard card-not-present transaction with a Mastercard Corporate card has an interchange rate of 2.70% + 10¢, while the rate for a Level 2 Corporate card transaction is 2.50% + 10¢.

Discover and American Express Level 3 Rates

Discover does not offer Level 2 or Level 3 credit card processing.

American Express does offer an enhanced data program. You can only participate if you have a direct processing agreement with Amex. This is for large businesses processing over $1 million in Amex transactions per year.

Providers that Support Level 3 Processing

As mentioned before, you need a specialized payment gateway to accept Level 3 data. Not all merchant account providers can accommodate this.

Here are some of our top recommended providers that support Level 3 processing.

  • Payment Depot: A subscription-based provider that offers rate discounts for higher volumes. It partners with PayTrace for Level 3 processing. It automatically populates data fields to make things simpler.

  • Dharma Merchant Services: An interchange-plus provider with some of the lowest rates. It supports Level 3 processing through the MX Merchant interface on their B2B app, at just $20/month.

  • Stax by Fattmerchant: A subscription-based provider with volume discounts. Fattmerchant's Virtual Terminal Plus supports Level 3 processing.

Bottom Line

Level 3 data processing allows you to reduce processing rates, which can really add up. If you sell to corporations and government agencies, it's worth it to see how you can qualify for Level 3 processing. Take your time to shop around for the right merchant account provider for your needs.

Anna G is a contributing writer at CreditDonkey, a credit card processing comparison and reviews website. Write to Anna G at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.


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