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The Benefits Of Level 3 Processing

If your business currently accepts credit and debit card payments, and you're using either a point-of-sale terminal, mobile card reader, or a standard payment gateway to process those payments, you're more than likely setup for Level 1 payment processing.

However, payment processing can go as high as Level 3 (also known as Level III). Depending on your  type of business and your customer base, Level 3 payment processing may need to become a priority for your business in order to ensure that you're paying the lowest possible processing rates and fees.

So what is Level 3 payment processing and how can it benefit you.

Level 3 Payment Processing Defined

When verifying and authorizing Level 1 transactions, processors require a limited amount of data. In most cases, you only need the merchant name, date and transaction amount for the payment to go through successfully.

However, with Level 3 transactions, a lot more information is required at the time of the sale, including:

  • Destination postal codes
  • Tax amounts
  • Freight amounts
  • Invoice numbers
  • Item descriptions
  • Item product codes
  • Item quantities
  • Ship from postal codes

[You can see the full list of Level 3 requirements here.]

How Level 3 Processing Helps Buyers and Sellers

As mentioned above, Level 3 processing provides superior reporting, with each transaction requiring a minimum of 15-20 “line item” details. Still, it's possible to create as many as 100 customized fields.

This level of reporting provides buyers with much greater control. Corporate clients and government agencies can more easily monitor internal spending and track the transaction from inception to settlement.

Level 3 also allows account holders to place certain restrictions on whatever cards they issue to employees. Common limitations include daily spending quotas or merchant-specific whitelists and blacklists.

So it's easy to see how Level 3 processing benefits your customers, but as a B2B or B2G business, why should you consider this payment option?

There are three very important reasons:

1. Much Lower Processing Costs

Level 3 payment processing qualifies for much lower interchange rates than Levels 1 or 2. Because there is less overall fraud with this higher payment level, the card brands (Visa & MasterCard) offer substantially lower interchange rates in return.

In fact, you will automatically save a minimum of one-percent on the interchange rate just by using Level 3 processing. Over the course of one year, this type of reduction will save your business many thousands of dollars in processing fees. View the current Level 3 interchange rates.

2. Faster Account Settlements

Level 3 payments usually happen more quickly, which can be a huge asset if cash flow is a concern.

3. More Customers and More Sales

Many corporations and government agencies only buy using Level 3 or corporate purchasing cards. By upgrading your payment infrastructure, you'll be able to tap into a much larger pool of customers. This is especially enticing given the volume, frequency and prices normally associated with B2B and B2G transactions. More customers will equal more sales. More sales will equal more profit.

How Do I Process Level 3 Transactions?

At first glance, it may appear that Level 3 processing would be very time consuming because of the additional data that is requires. But with our service that is not the case. Tailored Transactions offers a customized payment gateway that can process a Level 3 transaction in the same amount of time that it takes to process a standard Level 1 transaction.

Our payment gateway has a built-in template that will automatically populate the required Level 3 data on the back-end, allowing your business to receive the substantial savings that Level 3 Processing provides without doing any additional work. We can setup our payment gateway to process both MO/TO and retail transactions. We can provide you with a free USB card reader if you accept in-person payments.

Is Level 3 Payment Processing Right for You?

If your business accepts commercial or purchasing credit card payments, you need to be setup for Level 3 payment processing, or else you’re missing out on tremendous profit potential — both in terms of reduced costs and increased sales.

To learn more about Tailored Transactions Level 3 payment processing solutions, contact us today!

Visit us online at or call us direct at (888) 669.1686