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Level 3 Processing Explained

June 9, 2016


If you receive credit-card payments from other businesses, you need to investigate the potential benefits of Level 3 processing. 

What is Level 3 processing? 

In simple terms, Level 3 processing transmits an additional set of specific line-item details (item descriptions, quantities, tax detail, etc.) for both VISA and MasterCard Corporate and Purchasing cards.  By transmitting this additional transaction detail, both card brands will provide significantly lower interchange rates on the eligible B2B transactions. 

Why do VISA & MasterCard have lower interchange rates for Level 3 transactions? 

The additional Level 3 data detail received by VISA & MasterCard has value for certain larger Corporate and Purchasing card holders. This additional transactional detail helps businesses to minimize inappropriate spending and reduce chargebacks.  This greater control of the companies’ spending allows the business to reduce costs and improve business operations. 

I want to receive lower interchange rates on my credit-card transactions. Are my transactions eligible and what do I need to do? 

Only Corporate and Purchasing card types are eligible for Level 3. So if you sell mostly to consumers (as opposed to businesses) you are not going to be able to receive the more favourable Level 3 rates.

Eligibility does not necessarily mean you will receive these lower rates. You must also submit your transaction and Level 3 detail via a Level 3 supported gateway or Level 3 supported software. (You cannot qualify for Level 3 when using a standard credit card terminal). 

Visa & MasterCard are also very particular regarding the way the Level 3 data is passed to them. In some cases the data must fall within a particular range, quantity or format. So you will need to have a merchant account provider (such as Alternative Banking Solutions) that understands exactly what is required in order for eligible transactions to qualify for Level 3 rates. ABS has in-house staff members that have spent a lot of time training to understand the Level 3 ins and outs and therefore have the expertise necessary to get your eligible Level 3 transactions to qualify for the best possible interchange rate.

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Alternative Banking Solutions Inc.

300 – 840 6th Avenue SW

Calgary, Alberta T2P 3E5


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