B2B & Level 3 Processing

payments equipment

What is Level 3 Processing?

When your business accepts a credit card payment, there are three main participants in that transaction – the issuing bank (CapitalOne, Bank of America, etc.), the card brand network (Visa, MasterCard, etc.) and the processor (KastenBerry, FirstData, etc.).

Card Brands receive 0.13% to 0.15% of the transaction value.

Issuing Banks receive 70-90% of the fee for processing every credit card (called Interchange).

Processors and their ISO’s earn often 10-15% of the entire cost of processing.

Level 3 processing is adding key pieces of information to each transaction’s record so that Visa and MasterCard reduce the interchange (amount due to the issuing bank) on qualifying transactions. 

Reduce How Much the Big Banks Get and Increase Profits

What's Level 3 Processing Worth?

On a single $10,000 transaction, going from Visa Purchasing STD to Level 3 would save you $105 – on ONE transaction. For MasterCard it would be even more. Moving from MC Purchasing STD to Level 3 savings would be $140 on a Large Ticket program.

How do businesses achieve Level 3 processing rates?

Level 1 Data

Level 1 is the traditional consumer transaction and passes limited information back to the purchaser – merchant DBA, transaction amount, and date.

Level 2 Data

Level 2 adds two key pieces of information to the purchaser’s statement – tax amount and customer code (often invoice is used here). This information can be passed on select countertop terminals and some software solutions.

Level 3 Data

Level 3 processing requires the same amount of information as a detailed invoice and it all passes to the payment network for the purchaser’s benefit. There are up to 21 fields and some of them are freight & duty amount, unit of measure, commodity code, and others.

Tier 1 Virtual Terminal

Level 3 processing data is cumbersome to capture, enter, and verify across the payment networks. A Tier 1 virtual terminal like that offered by KastenBerry can not only pass the right level of information to the payment network, but it will automate the data required to get the best rates.

Find out if your business qualifies for Level 3 Processing & start cutting your processing bills by up to 37% or more

Level 3: Frequently Asked Questions

The best way to tell is by looking at your merchant statement. Specifically, look for any line item that says “Data Rate 3”, “DR3”, or “Level 3”. Don’t confuse this with “Tier 3” – this could refer to your pricing program or another interchange indicator. Yes, it’s confusing – that’s why our Sales Executives are here to help and walk all of our clients through their first few statements.

There are specific categories, called “Merchant Category Codes” that make a business eligible for Level 3 processing rates on business purchases. Manufacturing, commercial printers, equipment sales, HVAC, electrical, contractors, and many more. Contact our team today – your processing account may not be set up properly for your business.

Usually businesses miss out on Level 3 processing savings because their equipment or software is incapable of capturing the correct level of information. If that isn’t the issue, then your business isn’t set up properly in the correct MCC code.

Yes. Purchasing cards qualify for Level 3 rates and can even go down to 1.3% or lower for larger transactions carrying Level 3 data. There are best practices to consider when working with GSA cards – our team can walk you through how to handle that.

It’s almost impossible to tell without looking at specifics related to your business. Every member on our team is trained on advanced statement analysis – many of them already or on the path to obtaining the Certified Payment Professional designation. We can dissect your statement and provide you with the information you need to make a good decision for your business.