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Understanding Level 3 Credit Card Processing and Enhanced Data

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(Credit: Understanding Level 3 Credit Card Processing and Enhanced Data ) Understanding Level 3 Credit Card Processing and Enhanced Data
February 11
11:12 AM 2021

No matter what the purchase is, whenever a credit card is being used to order goods or services from a merchant, the credit card company issuing the card is taking on some level of risk. Because of this they charge merchants who accept their cards a fee called an interchange rate. No, because the interchange rate is tied to the level of risk that the issuing company is taking on for the transaction, the more secure the transaction the lower the rate you will pay. Companies that have set up a payment processing system to process at the lowest rates Could be missing out on hundreds or even thousands of dollars.

How much are interchange fees?

Each credit card company sells their own interchange rates as well as what they will accept for a level two and level three processing. They may set these either once a year or twice a year, usually in April and October. When you use a professional interchange processor, you won't ever be left in the dark wondering what the latest requirements are. The interchange rates vary between 1.8% plus$.10 per transaction to as much as 2.1% plus $.10 per transaction.

This may not be a lot of money when it comes to consumer purchases. But consumers typically do not make purchases at the amount of volume that occurs between businesses and merchants, or merchants and government agencies or other public entities. So if businesses want to save on B2B or B2G transactions, then they will have to begin submitting level II data or, even better, level III data.

What are the levels? What do they correlate with?

The levels refer to how much data is submitted at the time of the transaction. Consumer transactions are only eligible for level one transactions. Think about the last time you went to a gas station. You probably had to tape your ZIP Code into a keypad but no other information about your transaction was required. When you order from an online merchant you do not have to submit the tax ID or product code in order to receive it. That is why individual consumers only qualify for level 1 transactions, and why companies that do business with other companies (B2B) or public agencies (B2G) should take advantage of what higher levels of processing can do.

Level two processing is the next level up, but it is not the maximum amount of savings your business could be seeing. The main distinction between level two and level one is that it asks for more information. Now you must require submit the following information at the time the transaction is being made:

  • Sales tax amount

  • Customer code

  • Merchant postal code

  • Invoice number

  • Tax ID number

  • Order number

The best level way to see savings on your payment processing fees is to process all of your transactions at a level two or higher.

What are level III transactions?

Level 3 credit card processing yields the highest savings. Not only do you need to provide all of the data to process at a level II, but additional data. Calling a professional to help you change your payment processing means that you can easily make the switch without disrupting your business.

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