What is the difference between Level 2 and Level 3 data?

Understanding the Differences Between Level 2 and Level 3 Data

In the realm of payment processing, understanding the various levels of data can significantly enhance transaction analysis and reporting capabilities. Among these levels, Level 2 and Level 3 data play a crucial role in providing detailed insights into cardholder transactions.

Level 2 Data

Level 2 data builds upon the basic Level 1 data, which includes information such as the transaction date, amount, and cardholder’s name. It further enriches this data with additional information, such as:

• Tax amounts
• Merchant postal codes
• Customer codes

This enhanced data allows merchants and payment processors to gain a more comprehensive understanding of transactions. For instance, tax amounts can be used for sales tax reporting and compliance, while merchant postal codes can assist in fraud detection and geographical analysis. Customer codes, on the other hand, enable the identification of repeat customers and the tracking of their purchase patterns.

Level 3 Data

Level 3 data takes the granularity of Level 2 data a step further. In addition to the information provided by Level 2, it includes detailed insights into the transaction, including:

• Product details
• Quantities
• Pricing

This granular level of data provides merchants with invaluable insights into their sales performance. By analyzing product-specific data, they can identify best-selling items, optimize inventory, and tailor marketing campaigns accordingly. Additionally, quantity and pricing information can be used for inventory management, revenue tracking, and customer segmentation.

Key Differences

The primary difference between Level 2 and Level 3 data lies in the level of detail provided. While Level 2 data offers additional information compared to Level 1, Level 3 data takes it a step further by providing granular insights into product-specific transactions. This enhanced data enables merchants to gain a deeper understanding of their customers’ purchase behavior and make data-driven decisions to improve operational efficiency and profitability.

Applications

Level 2 and Level 3 data find applications in various aspects of payment processing, including:

• Fraud detection and prevention
• Chargeback management
• Sales tax reporting
• Inventory optimization
• Customer segmentation

Conclusion

Level 2 and Level 3 data are essential tools for merchants seeking to enhance their transaction analysis capabilities. By providing additional insights into tax amounts, merchant postal codes, and customer codes (Level 2), and granular details on product purchases (Level 3), these data levels empower merchants to make informed decisions, optimize their operations, and improve their overall payment processing experience.