Level III Processing Requirements

One of the most common types of expenses that businesses try to reduce is their credit card transaction fees. When you as a consumer need to buy something online, you can usually make that transaction in a few minutes, maybe even seconds. In fact, you have probably made a lot of purchases using one-click options, or by simply typing your ZIP code into a keypad. Because not a lot of data is being asked of you, these consumer transactions are the least secure, otherwise known as Level I transactions. Because they are the least secure, the credit card company is taking on greater risk if the buyer, you, can’t pay. However, consumer transactions are a lot different than the kind businesses make between each other or with government agencies. And because the total dollar amount and product amount can also be a lot greater, the credit card company takes on greater risk. In exchange for taking on that risk, they charge merchants a larger interchange fee. 

But if merchants request more data at the time of the transaction, then they can qualify for Level II rates or, even better, Level III rates, which offer the highest discount on interchange fees. 

Every time you accept a credit card payment from another business you have to pay the interchange fee, but you may be able to qualify for a discounted interchange rate. If you want to keep more of your profits and save your company money, then you should contact us at Interchange Pros. We help companies save on B2B transactions by reconfiguring their point-of-sale (POS) systems, credit card terminals, and payment gateways to submit the data required by major credit cards to qualify for lower rates.

What is Level III processing?

There are 3 processing levels that a transaction can fall under based on how much data is requested and received at the time the transaction took place. The more data provided, the higher the processing level, which means the more you save.

As mentioned earlier, B2B transactions are significantly different than consumer cards. When you purchase items online you typically have to give the credit card number, your billing ZIP Code, the expiration date, and sometimes the CVV. You generally type this in on a keyboard if you are shopping online, but if you were in a store you may just type it into a keypad. This is a Level I transaction. Consumers are not eligible for Level II or Level III transactions. 

Level II transactions ask for more information, such as the customer code, tax amount, tax identification, and invoice number. But to save more money on processing, additional information would need to be entered when processing their transactions. 


Qualifying for Level III Processing

One of the obvious challenges is that with more information being requested, there needs to be an effective system that can populate the appropriate data fields to accept that information, and the purchaser must have the ability to input that information. Interchange Pros helps you with your software needs and also your hardware needs as well. 

In order to qualify for Level III processing, you must include all of the data that is necessary for Level II processing and Level I processing. The following information is needed to process at a Level II processing:

  • Standard credit card information
  • Merchant name
  • Sales tax
  • Customer code or invoice number

A Level III and transaction must include:

  • All the information from level one and level two
  • Discount amount
  • Freight/shipping amount
  • Duty amount
  • Item sequence number
  • Item commodity code
  • Item product code
  • Item quantity
  • Unit of measure
  • Unit cost
  • Discount per line item
  • Line item total

This list is subject to change either once a year or twice a year, depending on the credit card company. Different credit card companies will make small changes to what they require versus what another major credit card will require. For example, Visa doesn’t but MasterCard does require the following fields for Level III processing:

  • Product code
  • Product description
  • Extended item amount
  • Debit or credit indicator

How Interchange Pros Can Help You Save Money

Your company can qualify for Level III processing. Interchange Pros can help you access Level III rates by configuring your POS systems, payment gateways, or credit card terminals to submit the necessary data to enjoy bigger discounts on your processing fees.