What is Level 3 Processing?
Every time your business accepts a payment, three entities get paid – the bank (interchange), the network (Visa, MC, etc.) and the processor.
Level 3 processing refers to the reduction in interchange cost from Level 1 (the highest cost transaction). These interchange adjustments are due to additional information being added to the transaction, reducing its risk according to the card network and issuing bank.
Interchange accounts for 70-90% of your cost of accepting payments and getting Level 3 payment processing discounts will reduce your cost of accepting credit cards from government and other businesses by a full percent or more.
| Data Element | Level 1 | Level 2 | Level 3 |
|---|---|---|---|
| Merchant Name | X | X | X |
| Transaction Amount | X | X | X |
| Transaction Date | X | X | X |
| Customer Code | X | X | |
| Ship From Postal Code | X | ||
| Destination Postal Code | X | ||
| Invoice Number | X | ||
| Order Number | X | ||
| Freight Amount | X | ||
| Line Item Detail | X | ||
| Can’t see the full table? Tap here. | |||
A quick primer on Interchange
What is Interchange?
Interchange is a rate and/or fee charged by card-issuing banks to cover the cost of handling and risk involved in bank credit or debit card transactions.
Who Sets the Rates?
Interchange rates are set by credit card companies such as MasterCard, Visa, American Express, and Discover. Visa and MasterCard typically publish updated interchange rates in April and October. The following rates are current as of April 2018, and are publicly available.
What data is required for each rate?
VISA and MasterCard require different amounts of data to qualify for Level II and Level III rates. Our system can auto-fill this data so merchants can qualify for higher savings on each transaction.
Why you may not receive Level 3 Interchange Rates
While Level 2 processing rates are relatively easy to get, Level 3 is all or nothing. Here are the most commonly missed fields:
Duty Amount
Product Detail
Address Verification
Tax Amount
Commodity Code
Freight Amount
MasterCard does not distinguish B2B merchants the same way Visa does
MasterCard wants all the data. To qualify for the best data rates, make sure you input info into ALL PO fields and tax amounts greater than $0. If you don’t, the “standard rate monster” will be knocking at your door.
Visa requires less data upfront.
Always submit AVS information and a PO number with your transactions. If you’re able to include a tax value greater than $0, you’ll qualify for Level 2 and Level 3 rates, which are even lower than regular B2B rates.
