level ii and iii credit card data

Ultimate Guide to Level II and III Credit Card Data

Managing credit card transactions involves a lot of data, and as a merchant, it’s important to understand not only what the different types of data mean, but also your responsibility in safeguarding it.

There are different levels of security compliance depending on the number of transactions you process, in addition to being categorized based on the amount of data you send. In the industry, these distinctions are known as the credit card processing level and the PCI compliance level.

If you feel confused about these data and compliance levels, this page will provide you with information and resources about credit card processing data and PCI compliance, as well as the different levels of compliance.

Credit Card Processing Levels Explained

In the merchant account business, there are different levels of data required to process transactions, and transactions are qualified or disqualified according to a three-level system. Furthermore, there is a difference in the level of data needed by different merchants.

The levels are determined by the amount of information that is required or passed to complete a payment. Merchants can obtain lower interchange rates and lower processing costs when they submit credit card transactions with Level 2 and Level 3 card data since there is less risk associated with the transaction. It is therefore in the merchant’s best interest to submit Level 2 and Level 3 card data as often as possible.

The majority of businesses operate at Level 1 processing, which is suitable for business to consumer (B2C) transactions. However, there are businesses that are exclusively business to business (B2B) merchants, and are eligible for interchange fee discounts at Levels 2 and 3.

When the credit card processing industry undergoes changes, so do regulations on how this data is processed, so it’s important to know the difference between the various levels when it comes to PCI Compliance and data security. 

Due to the fact that standard credit card processing terminals cannot input the data or forward it to the credit card service, Level 1 businesses typically stay at that level unless they make the necessary changes to accept that information. For instance, although Level 2 data is easy to enter, there are separate credit card terminals or software packages that can automatically populate this data. 

Level 3 data, on the other hand, can only be processed by certain gateways. Merchants can handle Level 2 and Level 3 data through gateways and separate credit card terminals through merchant credit card processing services. Businesses can also use merchant support services to configure their information before sending Level 2 and Level 3 data to the payment provider.

B2C and B2B in Relation to Credit Card Processing and Data Levels

According to a 2016 study by the Federal Reserve, average B2B transactions are $31,118 for debit ACH, and $9,349 for credit ACH. In contrast, the average debit card transaction for a consumer is $44, while the average credit card transaction for a consumer is $57. 

In other words, the average ticket price for a B2B transaction is likely significantly higher than the average ticket price for a B2C transaction.

Compared to B2C purchases, B2B purchases also sell more goods and order more frequently. 

In addition to price, B2B transactions often involve very different terms than B2C transactions. In contrast to B2Cs, where payments are generally due immediately at the point of sale or through an online terminal, B2Bs may have a little more flexibility. Many companies require invoices, and payments are not taken in advance. Businesses usually have 30 days to settle invoices after receiving goods or services. They don’t need to pay until they receive the goods or services. 

Credit Card Processing Levels and Data Levels

Both data level (used by Visa) and data rate (used by MasterCard) refer to the amount of information a business provides with a transaction. For the sake of simplicity, we’ll just refer to it as data level.

As a business provides more information with a transaction, the level of data increases. Transactions passing with the least amount of data are at level 1, and transactions passing with the most data are at level 3. Data supplied with the transaction is reduced as the number decreases.

As a general rule, the greater the amount of data in a transaction, the lower the interchange costs. To put it another way, the more data a business passes along with a transaction, the lower its transaction fee will be. 

What Are the Different Credit Card Data Levels?

As has been established, the more data a merchant provides, the higher the transaction level. But there are specific verification and authorization requirements for each level of processing. In addition, the type of customers or clients your business serves will play a role in determining this.

In Level 1, only a minimal amount of data is required, including the merchant’s name, transaction amount, and transaction date. In cases where the majority of a merchant’s business is handled through consumer credit cards, only level 1 data is needed. However, fees would be higher if only level 1 data were provided. 

For instance, the Visa Commercial Card Present Level 1 fee is 2.50% plus $0.10, while the level 2 rate would be 2.05% + $0.10.

Here are the different data levels and the information associated with them:

Level 1

Typically, Level I card data consists of consumer transactions and limited purchase information. In a Level I purchasing card transaction, the same information is captured as in a traditional credit card purchase transaction. The information includes: total purchase amount, date, merchant category code, supplier and retailer.

Level 2

Data at Level II includes the same information captured at Level I, plus information on the customer’s accounting code, merchant’s tax identification number, and applicable minority- and women-owned business status. In many cases, corporate, government, and industrial buyers can’t access Level-2 data elements via a standard credit card point of sale terminal because of their restricted capabilities. An additional terminal that allows you to enter the necessary data might be required.

  • A tax identification number
  • A merchant’s minority code
  • Merchant state code
  • A ZIP code for the merchant
  • Amount of sales tax
  • Reference number for the customer

Level 3

This level of purchasing card data includes all the same information as levels I and II, as well as the following: quantities, product codes, descriptions, shipping ZIPs, freight amounts, duty amounts, order numbers, unit numbers, unit of measurement, extended item amounts, discount indicators, discount amounts, net/gross indicators, tax rates, tax types, debit or credit indicators, and alternate tax identifiers. Level III provides detailed information about each line item. The information you collect is similar to the information you would find on an itemized invoice, but it requires greater system capability, which is provided by your payment processor or payment processing system. The items data items that belong to level 3 include:

  • The invoice number
  • The order number
  • The ZIP code from the package’s origin
  • The zip code of the destination
  • The amount of freight
  • The amount of duty
  • The extended amount for this item
  • Product code of the item
  • Commodity code of the item
  • Description of the item
  • The quantity of the item
  • The unit of measurement for the item 

Data Requirements for All Credit Card Processing Levels Compared

Below is a table summarizing the type of data each level requires:

Data Fields RequiredLevel 1Level 2Level 3
Card number
Card expiration date
CVV2 code
Transaction amount
Merchant’s name
Merchant category code
Customer reference numberX
Sales tax amountX
Merchant state codeX
Merchant ZIP codeX
Requestor nameX
Destination addressX
Destination stateX
Invoice numberXX
Order numberXX
Duty amountXX
Item ID or SKUXX
Item descriptionXX
Item quantityXX
Item unit of measureXX
Item Commodity codeXX
Freight amountXX
Ship-from Zip CodeXX
Ship-to Zip codeXX
Line DiscountXX

Keep in mind that some of these requirements might differ depending on your payment processor and card brand.

How and Why Does the Data Level Affect Your Processing Rates?

In exchange for a significant reduction in transaction fees, Level 2 and Level 3 require significantly more data. Level 2 interchange fees are available to merchants whose main business is B2B. Level 3 interchange rates are available to merchants engaged primarily in business-to-business or business-to-government transactions.

The purpose of these discounts is to encourage businesses to accept credit cards for major transactions instead of other forms of payment. As a result, credit card companies require a minimum transaction amount. They may also offer a tiered discount, which increases with transaction size.

Any transactions submitted with higher levels of data (Levels 2 and 3) will receive lower interchange rates from Mastercard and Visa.

Benefits of Levels 2 and 3

Processing transactions using level 2 and level 3 data will result in lower costs for the business taking the card, meaning a lower overall cost of processing for the business. Even Visa’s interchange table mentions that B2B payments receive a better rate in some places.

Using Level 2 credit card processing solutions, B2B merchants can strengthen relationships with their clients and increase large ticket sales. On the other hand, it is becoming increasingly common for government and institutional cardholders, like those who use GSA SmartPay, to demand Level 3 card information from vendors.

Level 2 and 3 rates apply to commercial cards, but if all data is not submitted, level 1 rates may apply. Data level 1 is only available for consumer cards.

Furthermore, data at levels 2 and 3 provide greater insight into employee transactions, enabling businesses to manage budgets and spending more effectively. There may also be additional benefits offered by the card brands, such as emergency cash advances, rental car insurance, roadside assistance, global medical assistance, corporate trip planning, lost passport/luggage reimbursement, and others. These benefits may have additional requirements for these benefits, depending on the card company.

You can access significantly lower rates with higher levels of credit card processing, though the specific savings will vary depending on the card used for the transaction. Even one large sale can quickly exceed the additional cost of level 3 processing when accepting large ticket transactions with level 3 data.

Here is a general look into the reduced rates for levels 2 and 3:

  • Credit card brands reduce the interchange rate for transactions with level 2 credit card processing data by roughly 0.50%.
  • Credit card brands reduce the interchange rate by up to 1.00% in exchange for transactions with level 3 credit card processing data.

Interchange rates come in many forms, and while some transactions qualify for lower interchange rates based on data levels, others do not. With level 2 and level 3 processing, the following transaction types are eligible for rate reductions:

MasterCard Data Rates 
Data Rate 1
  • Standard Rate: 2.65% + $0.10/transaction
  • Level 2 Rate: 2.00% + $0.10/transaction
  • Level 3 Rate: 1.75% + $0.10/transaction
Data Rate 2
  • Standard Rate: 2.81% + $0.10/transaction
  • Level 2 Rate: 2.16% + $0.10/transaction
  • Level 3 Rate: 1.91% + $0.10/transaction
Data Rate 3
  • Standard Rate: 2.86% + $0.10/transaction
  • Level 2 Rate: 2.21% + $0.10/transaction
  • Level 3 Rate: 1.96% + $0.10/transaction
Data Rate 4
  • Standard Rate: 2.96% + $0.10/transaction
  • Level 2 Rate: 2.31% + $0.10/transaction
  • Level 3 Rate: 2.06% + $0.10/transaction
MasterCard Business Debit/Prepaid
  • Standard Rate: 2.65% + $0.10/transaction
  • Level 2 Rate: 2.20% + $0.10/transaction
  • Level 3 Rate: 1.80% + $0.10/transaction
Visa Level 2 and 3 Rates
Visa Business Retail Card
  • Standard Rate: 2.20% + $0.10/transaction
  • Level 2 Rate: 2.05% + $0.10/transaction
  • Level 3 Rate: 1.85% + $0.10/transaction
Visa Business Card Not Present
  • Standard Rate: 2.25% + $0.10/transaction
  • Level 2 Rate: 2.05% + $0.10/transaction
  • Level 3 Rate: 1.85% + $0.10/transaction
Visa Commercial Card Not Present
  • Standard Rate: 2.65% + $0.10/transaction
  • Level 2 Rate: 2.05% + $0.10/transaction
  • Level 3 Rate: 1.85% + $0.10/transaction
Visa Commercial Card Present
  • Standard Rate: 2.50% + $0.10/transaction
  • Level 2 Rate: 2.05% + $0.10/transaction
  • Level 3 Rate: 1.85% + $0.10/transaction

Level 2 Vs Level 3

A higher level requires larger amounts of data, but also carries lower interchange rates. That’s one of the main differences between level 2 and level 3 data. It’s important to note that only Mastercard, Visa, and American Express offer higher-level interchange options. Additionally, Amex only processes at Level 2, while Discover is limited to level 1. Additionally, qualification requirements vary based on the type of card.

Processing at Level 1 is the default and most basic level, and most transactions are handled as level 1 unless they add the necessary additional data. For instance, level 2 and Level 3 cards qualify as Level 1 by default.

In the business-to-business (B2B) model, the higher levels of credit card processing are designed to incentivize business to gather more information from the transaction. Government officesses and businesses with detailed invoicing often require more detailed information from their transactions, which is why merchants need the necessary credit card processing tools to allow the submission of this additional information. A sale that includes Level 2 data also allows MasterCard and Visa to offer lower interchange rates since such transactions are thought to be more legitimate with such information provided.

A level 3 data set takes this to the next level. With Level 3 data acceptance, you can further reduce your interchange rates with savings of up to 1.00% when compared to standard interchange rates if you accept government-issued cards or process a lot of transactions in the B2B industry.

Data Policies by Card Issuer

The data requirements for credit card transactions vary from issuer to issuer, such as Visa, MasterCard, American Express, and Discover. A card company may also charge a different interchange fee based on the level of credit card processing it performs. Reauthorization may be required by some issuers in order to qualify for Level 2 or Level 3 processing. 

Following is a look at the different card brand requirements to explore these differences in more detail:


Visa requires annual processing of one to six million Visa transactions to qualify for Level 2 processing. The following forms must be completed by businesses for Visa verification:

  • Annual Attestation of Compliance (AOC)
  • Annual Self-Assessment Questionnaire (SAQ)
  • Quarterly Network Scan by an Approved Scan Vendor (ASV)

To qualify for Visa’s Level 3 processing, a business must complete $20,000 to one million eCommerce transactions each year. Business qualification for Level 3 processing is also verified using the above forms.

Visa accepts Level 1, Level 2, and Level 3 credit card data without prior approval if the business meets the requirements of the level. 


A business qualifies for MasterCard Level 2 processing when it processes more than one million transactions a year, but less than or equal to six million. This applies to all payments using cards belonging to the Mastercard brand. This includes the Maestro brand of cards.

Merchants who qualify for Visa’s Level 2 processing are also accepted by MasterCard. MasterCard requires three forms to be completed annually for verification:

  • Onsite Assessment
  • Annual Self-Assessment
  • Quarterly Network Scan by an ASV2

A business must have between $20,000 and one million transactions per year (combined MasterCard and Maestro) to qualify for MasterCard’s Level 3 processing. Mastercard Level 3 processing is available to merchants who meet the Visa Level 3 processing criteria. Visa Level 3 processing requires the same forms as Visa Level 2.

Similarly to Visa, Mastercard accepts all levels of credit card data without prior approval. 

American Express

In order to process Level 2 transactions, American Express recommends businesses seek pre approval. Businesses must submit Level 2 Merchant Validation Documentation, which includes summaries of the quarterly network scans and a PCI Self-Assessment Questionnaire.

Level 1 and Level 2 data are accepted by American Express once they have been approved. However, Level 3 credit card processing is not offered by American Express.


While Discover defines businesses qualifying for Level 2 processing as those that process one to six million Discover transactions each year, they only manage data at Level 1. As a result, Discover does not offer any discounted interchange rates for Level 2 data. Furthermore, the credit card company does not offer or define Level 3 data.

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