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Level 3 Payment Processing for B2B Businesses

If your business sells products or services directly to a customer you’re considered a Business to Consumer (B2C) company, this means that when it comes to processing your credit card payments, Level 1 processing should suffice.

However, if you’re selling products or services to other businesses (B2B), or government agencies (B2G), then the ideal solution is having your merchant account set up for Level 2 and Level 3 payment processing.

Don’t be embarrassed if you’ve never heard the terms Level 2 or Level 3 processing before. Most merchants haven't to no fault of their own. It’s a customized solution for B2B and B2G companies to optimize the interchange rates they receive so that they can save the most amount of money possible in interchange fees.

Level 3 Processing Explained

Whenever you accept a credit card payment the “interchange rate” determines how much you have to pay to the card issuing bank for that transaction.

Commercial credit card payments are placed into one of three processing categories – Level 1, Level 2 or Level 3 — with  Level 1 being the highest rates and Level 3 being the lowest.

Since business, corporate, and purchasing card payments are priced differently than consumer credit card paymments, it’s vital for you to receive the lowest interchange rates possible on those types of transactions.

Unlike Level 1 processing, which only requires the basic card information, Level 2 and Level 3 processing requires more payment details like:

  • Tax ID
  • Customer code
  • Tax amount
  • Item description

Level 3, goes a step further and may need the following details in order to qualify:

  • Destination Zip Code
  • Invoice Number
  • Order Number
  • Item Product Code
  • Item Quantity
  • Freight Amount
  • Duty Amount

Typically you’ll need to have around 12-20 fields.

The Benefits of Level 3 Processing

Since you provide Visa and MasterCard with additional information about the sale, they deem the transaction less likely of being fraudulent. So in return, they offer significantly lower interchange rates.

Level 3 interchange rates are usually .50% to 1.50% less than the standard Level 1 rates. So in many cases implementing Level 3 processing can lower your overall monthly processing fees by up to 35% or more.

Finally, Level 3 Processing provides enhanced transaction reporting which is a requirement for most government contracts. This enhanced reporting will make the reconciliation process a lot faster for both your business and your clients business.

How To Quickly Process Level 3 Transactions

At first glance, it might appear that Level 3 Processing would be very time-consuming. However, with our service that will not be the case!

We offer a customized online virtual terminal that can process Level 3 transactions in the same amount of time that it takes to process a standard credit card transaction.

Our virtual terminal will auto-fill the required Level 3 data, allowing your business to receive the substantial savings that Level 3 processing provides, without doing any additional work. We can set up the virtual terminal to process both keyed-in and retail transactions.

It's important to note that standard credit card terminals are not capable of handling Level 3 payment processing because of the additional data that is required to be transmitted.

Tailored Transactions offers the experience and expertise necessary to correctly set up your merchant account for both Level 2 and Level 3 payment processing.

Follow the link below to contact us for a no-obligation Free Rate Quote!

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