Level 2 and Level 3 Processing

Understand how Level 2 and Level 3 processing works.

When merchants accept customer credit cards, the most common type of transaction is a Level 1 transaction. These transactions require very little data.

  • Merchant name
  • Transaction amount
  • Date
  • Credit card information

Merchants are rewarded with lower interchange rates if they choose to participate in Level 2 or Level 3 processing by collecting and sending additional information known as Enhanced Data. Only Commercial (business, corporate, purchasing) and Government cards are eligible for Level 2 and 3 processing requirements. This information can be sent back to the corporation or government entity that provided the card and makes the reporting on their card purchases much more detailed, reducing the amount of risk associated with the transaction. Card brands can then use detailed reporting as a selling point for their corporate card programs, as they have incentivized merchants to gather that data for them.

*Only certain MCC (merchant category codes) are eligible for Level 2 & 3 processing savings per the card brands.

 

Level 2 Requirements

Level 2 requires only a few pieces of data beyond the requirements of Level 1 transactions and providing this information yields an interchange reduction of up to 0.50%. Transactions must be taxable and the tax rate must be between 0.1% and 30%.

Below are the additional required fields for Mastercard and Visa:

  • Customer Code 
  • Tax Amount 
  • Shipping Amount

Level 3 Requirements

Level 3 processing can net merchants an interchange discount of up to 1%, but they have to be willing to collect and input quite a bit of information. Again, only corporate and government cards are able to achieve Level 3 rates. The following fields are required for Level 3 and are in addition to the requirements for Levels 1 and 2 (AmEx and Discover do not participate in Level 3):

MasterCard

  • Product Code
  • Item description
  • Item quantity
  • Unit of measure
  • Extended item amount

Visa

  • Discount amount
  • Freight/shipping amount
  • Duty amount
  • Item Sequence Number
  • Item commodity code
  • Item description
  • Product code
  • Quantity
  • Unit cost
  • Unit of Measure
  • Discount per line item
  • Line item total

*Sales tax is no longer required for Level 3 on Visa

 

Stax Pay's platform automatically supports Level 2 processing. 

*We can also facilitate connecting your Enhanced Data-capable software through our gateway to process Level 3 transactions.

 

Please contact your Account Manager to get started.