Credit card transactions can fit into one of three different categories: Level 1, Level 2 or Level 3 processing and the Level classification can have a significant impact on Interchange fees imposed by the card brands. Typical retail and ecommerce transactions qualify at Level 1 rates. However, certain types of merchants that accept specific types of payment cards (commercial, business, government and purchase cards) can see reduced interchange fees by submitting additional Level 2 and Level 3 data.
Each level of processing requires a certain amount of data and requirements needed for verification and authorization. Therefore, Level 3 commercial card acceptance for businesses and government purchasing cards alike are priced differently from consumer credit card transactions due to the level of detail passed in a purchase transaction.
How does it work?
Level 3 processing requires the capture of specific line item details, which are then reported back to Visa and MasterCard to help businesses save money with lower interchange rates than those seen with Level 1, or 2 purchases. Level 3 credit card processing requires the inclusion of line item detail, which is comprised of product codes, itemized descriptions and quantities, item tax rate (sales tax detail), ship from postal code, freight amount, duty amount, destination postal code, destination country code, and more.
Additionally, the subset of data collected allows for greater transparency for an AR department to monitor and track internal spending and set parameters/restrictions for business card purchase behavior.
To add to the complexity, Visa and MasterCard have different requirements for Level 2 and Level 3 data, therefore the merchant’s point of sale and card processing system must be certified with their payment processor to ensure that transactions are qualifying at the proper interchange rate.
How to take advantage of Aliaswire’s Level 3 processing
Aliaswire’s DirectBiller solution is certified for Level 2 and Level 3 processing. Through DirectBiller, Aliaswire has helped many of our billers achieve interchange optimization and lower their costs of payment card acceptance.
For qualifying merchants, the savings from submitting Level 2 and Level 3 data can be substantial, with DirectBiller clients achieving savings of 80bps – 100bps savings on certain card programs.