Introduction
As a merchant, you may wonder, “How do you qualify for level 3 credit card processing?” This type of processing provides additional transaction data beyond what is typically required for Level I and Level II processing. You can save up to 1.5% per transaction by qualifying for Level III rates. In this post, we’ll discuss the requirements for qualifying for Level III processing rates and how you can benefit from this type of credit card processing.
What is Level 3 Credit Card Processing?
Level III credit card processing is a specific type of credit card processing that involves providing additional transaction data beyond what is required for Level I and Level II processing. This additional data includes line-item details, such as product descriptions, quantities, and prices. By providing this information, merchants can qualify for lower interchange rates, resulting in significant savings over time.
Qualifying for Level III rates can be especially important for businesses that process a high volume of B2B transactions. The savings can be substantial – up to 1.5% per transaction. According to recent research, merchants who qualify for Level III rates can save an average of 0.90% per transaction. This can add significant savings over time for businesses with a significant amount of credit card processing volume.
In addition to providing additional transaction data, Level III credit card processing requires specialized equipment and software. It can include payment terminals, point-of-sale (POS) systems, and payment gateways that are Level III-compliant.
What are Level 3 Processing Rates?
The exact rates for Level 3 processing will depend on various factors, such as the merchant’s industry, processing volume, and the credit card processing company’s pricing policies. The exact rates for Level 3 processing will depend on various factors, such as the merchant’s industry, processing volume, and the credit card processing company’s pricing policies.
It’s best to consult a credit card processing company for specific information about their Level 3 processing rates. It’s best to consult a credit card processing company for specific information about their Level 3 processing rates.
Level three processing rates depend on the transaction amount. The more amount you transfer, the lower the rates. Let’s explore the categories for Visa and Mastercard:
| Categories | Mastercard Range | VISA Range |
| Ticket 1 | $10,000 – $25,000 | $5,000 – $10,000 |
| Ticket 2 | $25,000.01 – $100,000 | $10,000.01 – $25,000 |
| Ticket 3 | $100,000.01 – $500,000 | $25,000.01 – $100,000 |
| Ticket 4 | $500,000.01 – $1,000,000 | $100,000.01 – $500,000 |
| Ticket 5 | $1,000,000+ | $500,000+ |
Businesses that process high-value transactions can save money by using Large Ticket Credit Card Processing, which charges a higher per-transaction fee and a lower percentage fee. Mastercard and Visa offer programs for high-dollar value transactions, but Level III data must be provided to qualify for these rates. By providing all the necessary information, businesses can benefit from significant savings on large transactions.
Requirements for Level III Processing
Merchants must meet specific requirements set forth by card issuers and payment processors to qualify for Level III processing rates. These requirements ensure that only certain types of transactions receive the lower interchange rates associated with Level III processing. Below are some of the primary requirements for Level III processing.
- Eligible Cards
Eligible cards for Level III processing are typically business-to-business (B2B) and business-to-government (B2G) payment cards issued by card networks such as Visa, Mastercard, and American Express. These cards are designed to facilitate large-volume, high-value transactions between businesses and government entities.
Corporate cards are similar to purchasing cards but are typically issued to executives and other employees for business-related expenses such as travel, entertainment, and office supplies. Corporate cards also often have higher transaction limits and more detailed reporting requirements than consumer credit cards.
The payment card must meet certain criteria to qualify for Level III processing. For example, the card must be registered with the appropriate card network for Level III processing and include specific data fields allowing detailed transaction reporting. Some of the information that may be required for Level III processing includes item descriptions, quantities, and other details related to the transaction.
- Business Type
Your business must be engaged in certain business-to-business (B2B) and business-to-government (B2G) transactions to qualify for Level III processing. It includes businesses that sell goods or services to other businesses or government agencies, such as wholesale distributors, manufacturers, and government contractors. Retail businesses that primarily sell to consumers may not be eligible for Level III processing. Some common examples of businesses that may be eligible for Level III processing include:
- Wholesale distributors
- Manufacturers
- Government contractors
- Transportation companies
- Professional service providers
It’s important to note that eligibility for Level III processing may vary depending on the specific requirements of the payment processor, card network, and other factors. Businesses that engage in high-volume, high-value B2B or B2G transactions are more likely to benefit from Level III processing. It’s always a good idea to work with a knowledgeable payment processor or consultant to determine your business’s eligibility and to ensure you meet all the requirements.
- Transaction Value
To qualify for Level III processing rates, merchants must process transactions that exceed a certain dollar amount. The minimum transaction amount required for Level III processing can vary by the payment processor and card issuer.
Level III processing rates are typically lower than Level I and Level II because the additional data provided with each transaction helps reduce the risk of chargebacks and fraud. The exact rates can vary depending on the payment processor, card issuer, and other factors.
Meeting the specific requirements for Level III processing is essential to taking advantage of the cost savings associated with this specialized form of processing. By ensuring that your business meets these requirements and processes eligible transactions correctly, you can save thousands of dollars per year on credit card processing fees.
How Do You Qualify for Level 3 Credit Card Processing?
Qualifying for Level III credit card processing is not as difficult as it seems. By following a few simple steps, businesses can upgrade their processing and start saving money.
- Upgrading Processing Software
The first step to qualifying for Level III processing is to upgrade your processing software. Level III data requires more information between the merchant and the card issuer than standard Level I and Level II data. Upgrading your software allows you to capture and send this additional information, which can qualify you for lower processing rates.
- Collecting Required Data
You must collect specific data fields for each transaction to qualify for Level III processing rates. This data includes invoice number, tax amount, item description, and shipping ZIP code. Collecting and transmitting this data to the card issuer can help you qualify for Level III rates.
- Negotiating with Merchant Services Provider
Merchant service providers are often willing to negotiate rates with their clients. If your business processes a large volume of transactions or has a high average transaction value, you can negotiate better rates for Level III processing.
- Implementing Best Practices for Level III Processing
Implementing best practices for Level III processing can help you maintain eligibility for lower rates. It includes collecting and transmitting the required data fields for each transaction, keeping your software up to date, and monitoring your processing to ensure you are still eligible for Level III rates.
- Choosing Best Gateway
When choosing the best gateway for level III processing, it’s important to consider options that offer auto-filling of required fields. With auto-fill, you can reduce human error and ensures that you provide the necessary line item detail to qualify for level III rates. Several gateways can auto-fill data for you, which is particularly important if multiple staff members enter payments. However, if you have a direct account with Amex and want to provide level II and III data, your options may be limited to processors utilizing specific platforms. It’s important to note that the gateways listed below are suited to providing enhanced data to Visa and Mastercard.
- HMS Pay
- CardPointe
- MX Merchant
- PayTrace
- NMI
Businesses must upgrade their processing software, collect required data fields for each transaction, negotiate with their merchant services provider, and implement best practices for Level III processing to qualify for Level III processing. By following these steps, businesses can save money on processing fees while enjoying improved reporting capabilities and higher transaction approval rates.
Conclusion
Level III processing offers several benefits for businesses that handle large B2B transactions. By qualifying for Level III rates, businesses can save money on processing fees, gain access to improved reporting capabilities, and experience higher transaction approval rates. It’s important to note that qualifying for Level III processing requires specific eligibility requirements and the proper software and data collection tools.
For businesses that frequently process large B2B transactions, qualifying for Level III processing is crucial to maximizing cost savings and improving efficiency. While the eligibility requirements may seem daunting, the benefits far outweigh the initial effort required to qualify.
Merchants should consider upgrading their processing software and implementing best practices for Level III processing to ensure they meet eligibility requirements and qualify for Level III rates. Negotiating with their merchant services provider can also help them secure better rates and more favorable terms. By following these recommendations, businesses can reap the benefits of Level III processing and maximize their cost savings.
