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|
|Ship From Postal Code||X|
|Destination Postal Code||X|
|Line Item Detail||X|
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Who is eligible for Level 3 Processing?
A quick primer on Interchange
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:
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.