Level 3 processing is a payment method tailored for businesses that deal with large transactions, particularly in the B2B (business-to-business) and B2G (business-to-government) sectors. It allows merchants to submit more detailed transaction information, which helps them qualify for lower interchange fees.
By offering this additional data, businesses can save significantly on transaction costs, enhancing their overall payment processing efficiency. This article explains the key aspects of Level 3 processing and how it benefits your business.
Understanding This Processing
Level 3 processing is part of the credit card processing system that requires more detailed transaction information than standard methods. Unlike Level 1 and Level 2 processing, which only involve basic transaction data such as the total amount and merchant details, Level 3 provides a breakdown of the items involved in the transaction.
For businesses involved in high-volume sales or government contracts, this processing is vital. It includes specifics like item descriptions, quantities, shipping addresses, and taxes, offering better transparency and reducing the potential for fraud. This level of detail qualifies merchants for lower interchange rates, directly cutting down transaction fees.
How Does Level 3 Processing Work?
Level 3 processing requires detailed data, and businesses must capture specific fields for each transaction. These fields include information about the items purchased, unit prices, quantities, and additional costs like shipping and taxes. For example, when a government contract is processed, the merchant must supply the relevant invoice numbers, product codes, and ship-to and ship-from locations.
Visa and Mastercard offer significant savings for transactions processed at Level 3, typically reducing fees by up to 1.5% when compared to standard processing rates. However, it is crucial to follow the specific requirements set by the card networks, as missing any of the necessary details can lead to processing at higher rates.
The Benefits
Level 3 processing offers several advantages for businesses, particularly those handling high-ticket items or large-scale transactions. One of the most significant benefits is the reduction in transaction fees. By providing more detailed information, merchants can qualify for lower interchange rates, saving money with every transaction.
Additionally, this processing helps with better reporting and compliance, especially for businesses working with government contracts. The detailed data required for this processing aids in meeting the reporting and auditing requirements set by government agencies or large enterprises, making your business more competitive in securing high-value contracts.
Another advantage is fraud prevention. The additional transaction data helps payment processors verify the legitimacy of transactions, reducing the chances of fraudulent activities, which can be a concern in high-value or B2B transactions.
How to Implement
To take advantage of Level 3 processing, your payment processor needs to support it. Nationwide Merchant Solutions offers mobile payment solutions and credit card processing machines that make implementing this payment processing seamless for businesses. If your company already processes a large volume of transactions or works with government contracts, integrating Level 3 could bring substantial savings and improved payment security.
This processing also simplifies tax management by offering detailed tax breakdowns for every transaction. This can be incredibly helpful for businesses with varying tax rates in different states or countries.
Start Saving with Nationwide Merchant Solutions
At Nationwide Merchant Solutions, we understand the importance of reducing transaction fees and streamlining payment processes. Our credit card processing machines and other solutions are designed to support businesses in implementing Level 3 processing efficiently. By offering transparent, low-cost payment processing, we help your business save money while improving overall payment efficiency.
Contact us today to explore how we can support your business’s payment needs and help you reduce processing costs.