Data Levels – The Effortless Advantage to Integrated Payments

Credit card transactions fall into three different categories or “data levels”.  Each level requires certain information to be sent to qualify a transaction. B2B transactions using business cards, corporate cards, and purchasing cards all qualify for level II and III processing. These data levels are in place to help with the cost of card-not-present business transactions. Without qualifying for these data levels, B2B transactions are costly to process so it’s important to understand the impact qualification has on rates. 

Think about going to a website and if you sign up (i.e. supply them with your information), you receive a discount on your purchase. The same logic applies with data levels — information is valuable and the more you can provide on the transaction, the better deal you get on processing. 

The term ‘data level’ simply refers to the amount of information a business provides with a transaction. Each level requires certain information to be sent to qualify a transaction. Higher processing levels require more details but also offer lower interchange rates in exchange. 

 Let’s dive into the data required for each level: 

Level 1: Basic payment data:

• The merchant’s name
• The transaction amount
• The date on which the transaction took place.
• The billing zip 

Level 2: Additional business information is required.

• Level 1 Data
• Tax amount details
• Customer code or purchase order number

Level 3: More detailed transaction data is required

• Level 1 and Level 2 Data
• Zip Code shipped from / selling from
• Zip Code shipped to / buyer location
• The invoice number
• The purchase order number
• The freight costs
• Details for each line item (or group)
• Commodity codes for line items 
• Additional data may be needed depending on card association

If you are using a stand-alone processor, this information will need to be input manually on transactions that qualify, which is why level II and III processing is most commonly utilized within businesses using a POS system that’s integrated with credit card processing. In many cases, it’s not possible to maximize your savings through data levels without a modern integrated solution because of the extra information and manual work required. If you’re using a standalone processing system and separate POS system, there is money left on the table by not having them speak to each other. Integrated software and payments often qualify the data level automatically without any additional work needed on the company’s end, but each integration is different. 

Below are some examples of the kinds of savings someone can expect by qualifying for level II and III processing: 

*These rates are examples designed to show the amount of potential savings between categories and do not reflect actual processing rates. Please consult with your merchant service provider to determine level II and III processing eligibility. 

Qualifying for level II and III processing can produce savings for businesses that accept business cards, corporate cards, and purchasing cards. For example, say that two $1000 transactions are processed. One qualifies for level III processing while the other does not qualify due to information not being provided or the provided information being inaccurate. Here is the cost difference between standard interchange vs. level III processing: 

• Standard Interchange
  • $1000 * 2.95% + $0.25 = $29.75
• Level III
  • $1000 * 1.90% + $0.25 = $19.25

Keep in mind that the cost of processing listed above does not include the merchant service provider’s markup rate, which is included in addition to the interchange rate. You can quickly see how impactful qualifying for data-level processing can be.

If you’re charging a high volume of corporate cards, explore the pros and cons of integrating software and payments in your business. Credit card processing fees are inevitable, but you can minimize the cost of processing if your software and credit card processor can work together to get the necessary information to qualify for level II and III processing.