Level 3 Processing
for Credit Cards
What is Level 3 processing for credit cards?
If your business sells to other businesses (B2B), particularly larger corporations or government purchases, you may qualify for Level 3 processing for credit cards. Level 3 processing helps lower your interchange rates and reduce your overall processing fees.
Every time you process a credit card payment, your business is charged an interchange fee. The interchange fee is what credit card issuers (like Visa and MasterCard) charge for processing credit cards, and the fee varies depending on card type. Interchange fees make up between 70 and 90% of total fees paid by merchants to process credit cards. (Source)
When you process a credit card, you’re then placed into one of three processing categories: Level 1, Level 2, and Level 3. Level 1 has the highest rates and Level 3 has the lowest. As you move up levels, there are more line-item details that must be sent with each transaction.
If your business accepts corporate cards, purchasing cards, or government spending accounts (GSA) issued by Visa or MasterCard, you can qualify for Level 3 processing for credit cards.
If a merchant wants to accept GSA cards, they must achieve Level 3 processing, since government entities, as well as some companies, require line-item details to appear on their bank statements.
Since corporate and government purchase cards are priced differently than standard consumer credit card transactions, it’s important for your business to receive the best possible rate for these types of purchases.
Here’s how it works.
How does Level 3 processing work?
Level 1 is fairly easy to achieve, and only requires the names, account numbers, and billing addresses of your customers. Level 2 requires more payment details, such as:
To achieve Level 3 processing, all transactions must include the same line-item details as Level 1 and Level 2, plus around 15 to 20 additional fields of line-item data, including:
Ship-from zip code
Destination zip code
Item product code
Item commodity code
Item unit of measure
Item extended amount
However, there are some circumstances in which Level 3 may require up to 100 fields.
Will Level 3 lower my processing rates?
Level 3 processing may seem like a lot of additional work, but your bank account will thank you for the extra effort.
Level 3 processing lowers costs for businesses that accept corporate cards, purchasing cards, or government spending accounts.
Since you’re providing so many line-item details at the point of sale, Visa and MasterCard view the transaction as less fraudulent, giving you access to exclusive Level 3 processing rates.
In fact, Level 3 rates can save your business as much as 1.5% per transaction and up to 43% on your overall credit card processing fees.
Is Level 3 processing secure?
A PCI-compliant payment gateway (like EBizCharge) provides the most secure method for processing Level 3 transactions.
With EBizCharge, Level 3 is just as secure as other processing methods. In fact, it’s typically more secure because it requires extra information in order to process the transaction. This additional level of security reduces potential fraud and chargebacks to your business.
How do I get Level 3 processing?
Level 3 cannot be achieved using a physical terminal. In order to qualify for Level 3 processing, all line-item details must be securely passed through a PCI-compliant payment gateway that allows you to send line-item details for each transaction. If the data gets passed correctly and it’s the right type of credit card, then the bank will approve a Level 3 transaction. If a merchant misses even one of these details, they will not qualify for Level 3 processing.
Most accounting systems require businesses to enter line-item details manually, which makes gathering and applying this data a challenging and time-consuming process.
Our EBizCharge payment gateway takes invoice information and line-item details already stored in your system and automatically passes them to the point of sale. EBizCharges then uses these details to qualify your cards at reduced interchange rates and achieve the lowest payment processing costs for your business.
With EBizCharge, your business can get Level 3 processing for credit cards without having to do any additional work.