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Level 3 data

What is Level 3 processing?

Short answer

Level 3 processing is the transmission of detailed line-item data alongside a commercial card transaction so it qualifies for the lowest interchange rate the card networks offer. It requires product codes, item descriptions, quantities, unit prices, freight and duty on top of the Level 2 requirements of sales tax and a purchase order reference. It applies only to commercial, corporate, purchasing and government cards, because consumer cards have no Level 3 category.

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The fuller explanation

Card networks price commercial card transactions by how much information travels with them. A bare authorization carrying only a card number and an amount earns the least favourable interchange available. The same card on the same invoice, carrying full line-item detail, earns a substantially better rate.

Published card-network and industry sources put the difference at roughly 50 to 150 basis points on a commercial card. On a $5,000 invoice that is $25 to $75 kept per transaction.

The most common reason a business fails to qualify is structural rather than technical: their accounts receivable team keys card numbers into a standalone virtual terminal, which has no connection to the invoice and therefore cannot transmit the required fields at all.

Important caveats

  • Level 3 does not apply to consumer credit cards. Sending line-item data on a consumer transaction does not reduce its cost.
  • A single missing required field drops the transaction to the next level down, silently. The payment still succeeds; it simply costs more.

Other ways people ask this

These phrasings share the same answer, so they live on this page rather than on duplicate URLs.

  • What does Level 3 credit card processing mean?
  • Level 3 data explained
  • What is Level III processing?

Follow-up questions

Does Level 3 require a specific processor?
It requires one that supports Level 3 pass-through and has it configured on your account. Many do; not all have it switched on. Ask directly what percentage of your commercial card volume qualified last month.
Is Level 2 worth doing on its own?
Yes. Level 2 is a meaningful improvement over no enhanced data and requires far fewer fields. It is often the realistic first step where line-item data is hard to extract.

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Where this fits

GuideCore capabilityLevel 3 is not a product anyone sells you. It is a data standard your transactions either meet or fail, silently, on every commercial card payment you take.Open QuestionCan a virtual terminal send Level 3 dataGenerally no. A standalone virtual terminal has no connection to your invoice lines, so it cannot transmit the product codes, quantities, unit prices and freight amounts Level 3 requires. Some gateways offer an enhanced-data entry screen where a user types line items manually, which does qualify, but it doubles data entry and degrades the moment somebody is busy. The durable answer is a connector that reads the invoice directly from your ERP.Open Resourceour checklistEvery field Visa and Mastercard require for Level 2 and Level 3 qualification, grouped by where the data lives on your side, so you can check whether your systems can actually send it.Open QuestionWhy did my transaction settle at non-qualifiedA transaction downgrades when it fails to meet the requirements of the interchange category it would otherwise qualify for and settles at a more expensive one instead. Common causes are missing line-item or Level 2 data, freight billed on a separate invoice, settlement outside the required window, a missing purchase order reference, and sales tax left blank rather than flagged exempt. A downgrade produces no error and no alert: the payment succeeds normally and simply costs more.Open

Read next

  1. 1Core capabilityLevel 3 is not a product anyone sells you. It is a data standard your transactions either meet or fail, silently, on every commercial card payment you take.
  2. 2Can a virtual terminal send Level 3 dataGenerally no. A standalone virtual terminal has no connection to your invoice lines, so it cannot transmit the product codes, quantities, unit prices and freight amounts Level 3 requires. Some gateways offer an enhanced-data entry screen where a user types line items manually, which does qualify, but it doubles data entry and degrades the moment somebody is busy. The durable answer is a connector that reads the invoice directly from your ERP.
  3. 3our checklistEvery field Visa and Mastercard require for Level 2 and Level 3 qualification, grouped by where the data lives on your side, so you can check whether your systems can actually send it.

Find out what your card volume actually costs

Send three months of statements and one representative invoice. You get back a line-item breakdown of what is downgrading and what it costs annually, whether or not you do anything with it.

Request an interchange audit