Level 3 credit card processing explained

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This short video explains the benefits of Level 3 processing for B2B & B2G businesses and how it will reduce your interchange costs.

You probably already know that Visa & MasterCard use interchange rates to determine how much you pay to accept a credit type of credit card. Processors receive no revenue whatsoever from interchange, 100% of this goes back to the card issuing bank.

Business, commercial (B2B) and government (B2G) purchase fall into 1 of 3 interchange categories. Level 1, level 2 and level 3, with level 3 being the lowest.   These “interchange” levels change based on additional information you enter with a transaction.

  • Level 1, this is a transaction you accept w/o doing anything other than swiping or keying
  • Level 2, includes sales tax (between 1%-22%) and invoice/customer code
  • Level 3.  It means passing line-item detail; information generally found on an invoice; PO number descriptions, quantities

These different levels have nothing to do with the rate your processor charges and qualify at the appropriate interchange code before your processors add their fee.

Level 2 can save you .50% and more for some of your transactions, level 3 can save you 1%-1.5% on interchange “Before” your processor adds their rate.


Level 3 processing requires you  use a payment gateway or software capable of supporting the additional data required to receive level 3 rates.  Credit card terminals generally do not support level 3 processing…

Stay tuned for future announcements, we are actually working on the ability to support level 3 process through terminals.

Questions? Give us a call 888 790 3450

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