What is a level 3 credit card?

Level 3 Credit Card Processing: Enhancing Business Transactions

Introduction

In today’s complex business landscape, efficient and cost-effective payment processing is crucial. Level 3 credit card processing emerged as a sophisticated solution designed to optimize business-to-business (B2B) and business-to-government (B2G) transactions.

Understanding Level 3 Processing

Level 3 processing elevates the level of detail captured during a transaction beyond the standard data points (Level 1 and Level 2). It requires the inclusion of additional information, such as:

• Customer purchase order number
• Invoice number
• Item-level detail (description, quantity, unit price)
• Shipping address and method

Benefits of Level 3 Processing

By providing detailed transaction data, Level 3 processing offers significant benefits to businesses:

• Reduced Fees: Visa and Mastercard offer lower interchange fees for Level 3 transactions due to the reduced risk associated with more accurate data.
• Quicker Settlement: Detailed data allows faster processing, resulting in quicker settlement of funds.
• Enhanced Fraud Detection: The additional information provided helps businesses identify and prevent fraudulent transactions.
• Improved Cash Flow: Reduced fees and quicker settlements improve cash flow and enhance business liquidity.
• Compliance: Level 3 processing meets industry standards for data security, reducing the risk of compliance violations.

How Level 3 Processing Works

To implement Level 3 processing, businesses need to integrate with a payment gateway that supports this advanced method. The gateway captures the required data from the point of sale system or e-commerce platform. This data is then transmitted to the payment processor, which uses it to calculate the appropriate interchange fees and facilitate the transaction.

Eligibility for Level 3 Processing

To qualify for Level 3 processing, businesses must meet certain criteria:

• Have a registered and active Merchant Identification Number (MID)
• Have a dedicated business account for receiving payments
• Be able to provide detailed transaction data in a secure format
• Adhere to industry standards for data security and PCI compliance

Conclusion

Level 3 credit card processing empowers businesses with a more efficient and cost-effective way to process B2B and B2G transactions. By capturing detailed data, businesses can reduce fees, improve cash flow, enhance fraud detection, and meet industry compliance requirements. As payment technology continues to evolve, Level 3 processing will play an increasingly important role in optimizing business transactions.