Level 3 processing is one of the payment processing industry’s biggest secrets. Issuing banks like Bank of America, Chase, CapitalOne, and dozens more relish the idea that your business is not receiving the discounts it would qualify for with the right processing partner and the right technology.
See that chart below? That giant blue section represents how much the banks make on your business. That processing statement you get each month should show interchange, assessments and network fees, and processing fees. Interchange is what the banks make, but they don’t have to make AS much.
Anatomy of Payment Fees
Imagine reducing that interchange cost by 20-30%. That is possible only with level 3 processing. Follow the math real quick… if interchange is 80% of your monthly fee, and you can reduce that by 25%, you just saved 20% of your TOTAL bill.
How do I get Level 3 Processing Rates?
Depending on the technology you’re using to process payments, getting Level 3 processing rates can be:
- Impossible – that countertop terminal is not capable of getting Level 3, neither is Authorize.net and several other gateways.
- Possible but Cumbersome – with your current gateway or payment partner, your system may allow you to get level 3 processing rates IF you manually key in all of the required information for each transaction
- Simple – with the right patented advanced processing platform and payment partner, Level 3 processing rates can be automated.
Here is a full list of the detail you need to embed in qualified transactions to get Level 3 processing rates:
Tax Amount (cannot be $0)
Customer Code (up to 30 characters)
Merchant Postal Code
Tax Identification Number
Merchant Minority Code
Merchant State Code
Ship From Postal Code
Destination Postal Code
Item Product Code
Item Commodity Code
Item Unit of Measure
Item Extended Amount
Looks pretty daunting right? It is. Unless you have highly trained staff with time to burn, this is an extremely cumbersome task just for one transaction. We have clients processing over 5,000 transactions a month – imagine putting 20 lines of detail into each one of those transactions?