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Understanding How Level 1, 2, and 3 Impact The Cost of Accepting Credit Cards

As a business that accepts credit cards from corporate customers, it’s important to understand what level 2 & 3 data means and it’s impact on the cost of accepting credit cards.

Credit card processing methods fit into three levels: Level 1, Level 2 and Level 3. Each level is defined by the amount of information that is required or passed to complete a payment.

Level 1 results in the most expensive way for a business to accept a credit card.

Clearing with Level 2 and Level 3 card data dramatically reduces the expense of accepting credit cards and is particularly applicable to B2B merchants that predominately accept credit cards from business, commercial, corporate, purchasing, and government cardholders.

Level 2 & 3 Credit Card Processing

LEVEL 2 DATA

Level 2 data refers to a more detailed transaction designed to support business-to-business (B2B) payment processing. Many businesses and government offices require their vendors to accept detailed transactional information associated with a transaction. To simplify B2B credit card processing and transactions, the company accepting credit cards provides Level 2 data along with the sale to enable lower interchange rates. Visa, MasterCard, and other recognize that if your business is providing this extra incremental information, that the sale is more likely to be legitimate and less likely to be contested. As such, they’re willing to provide a lower cost for the sale as it represents a lower risk to the credit card associations.

Processing Level 2 data requires either a standalone credit card terminal or our payment gateway which is enabled to handle Level 2 data. Common interchange reductions are around 0.50% lower than typical sales. To qualify for Level 2 data, merchants will be required to provide incremental data fields with each transaction. TouchSuite can configure your gateway to automatically pass this information through with each transaction:

  1. Merchant Name
  2. Transaction Amount
  3. Tax Amount (Between 0.1% and 31% of the total amount)
  4. Transaction Date
  5. Customer Code or PO number
  6. Merchant Zip Code

 

LEVEL 3 DATA (Lowest Cost)

If you’re processing in a B2B industry or if you accept a lot of Government cards, then having Level 3 data acceptance will help reduce your interchange costs the most. Often, Level 3 interchange rates are up to a full 1.00% lower! TouchSuite offers Level 3 support through our payment gateway. To qualify for Level 3 data, merchants will be required to enter all fields required for Level 2, plus the following:

  1. Ship-From Zip Code
  2. Destination Zip Code
  3. Invoice Number
  4. Order Number
  5. Item Product Code
  6. Item Commodity Code
  7. Item Description
  8. Item Quantity
  9. Item Unit of Measure
  10. Item Extended Amount
  11. Freight Amount
  12. Duty Amount

 

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