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Level 2 Credit Card Processing & Level 2 Data

What is Level 2 Credit Card Processing?

Level 2 credit card processing was created by major credit card companies, such as Visa and MasterCard, to provide a more detailed level of transaction data for businesses, particularly those in the B2B sector. This level includes additional information beyond the basic requirements of Level 1 processing, such as the customer’s tax ID, customer code, and other specific transaction details. The primary reason for its creation was to reduce fraud and improve the accuracy of transaction reporting. By providing this enhanced data, businesses can qualify for lower interchange rates, leading to potential cost savings. Additionally, it streamlines expense management and enhances customer relationship management by offering more comprehensive transaction insights.

Level 2 processing is designed for transactions over a certain amount, often around $5,000. Additionally, the business must provide the required enhanced transaction data, such as tax IDs, customer codes, and other specific details, to meet the criteria set by credit card companies like Visa and MasterCard. These thresholds ensure that the additional data provided is beneficial for reducing fraud, improving reporting accuracy, and ultimately qualifying the business for lower interchange rates.

Who is Durango Merchant Services?

Durango Merchant Services, founded in 1997, is a specialized payment processing company that zeroes in on high-risk industries and Level 2 and 3 credit card processing. Unlike traditional banks and payment processors, we cater to these often overlooked segments. Our Level 2 credit card processing service is tailor-made for Business-to-Business (B2B) transactions and supports the use of purchase cards. We understand the unique challenges faced by companies that qualify for Level 2 credit card processing and offer personalized services to ensure you have reliable payment solutions that meet all regulatory requirements. Our mission is to provide the support and customized payment options these sectors need to thrive, despite the complexities of their industries.

What Sets Durango Merchant Services Apart from the Rest?

What are Level 2 Credit Card Processing Requirements?

Level 2 credit card processing has a set of specific requirements that businesses need to meet to qualify for those lower interchange rates. These requirements are designed to capture more detailed transaction data, which not only helps with fraud prevention but also improves reporting accuracy.

First, businesses need to provide their merchant information. This includes the merchant category code (MCC) and the tax identification number (TIN). These identifiers help categorize the type of business and ensure accurate tax reporting.

Next, there’s the customer information. For Level 2 credit card processing, you need to capture details such as the customer’s tax ID and a customer code. This extra information helps in identifying and tracking transactions more precisely, which is particularly useful for B2B transactions.

Then, there’s the transaction information. This is where you include enhanced data like the invoice number, order number, and the sales tax amount. This level of detail helps in reconciling transactions and ensures that all the necessary tax information is accurately recorded.

Finally, for some level 2 credit card transactions, you might also need to provide detailed line item information. This can include descriptions of the items, quantities, and unit prices. This granular level of detail is particularly beneficial for businesses that deal with large orders or multiple items in a single transaction.

Is There A Role for Purchase Cards In Level 2 Credit Card Processing?

Yes, purchase cards (also known as p-cards) do play a significant role in Level 2 credit card processing. Purchase cards are commonly used by businesses for B2B transactions, allowing employees to make business-related purchases without the need for traditional purchase orders or reimbursement processes. When it comes to Level 2 processing, p-cards often meet the criteria due to the detailed transaction data they can capture.

Here’s how purchase cards integrate with Level 2 credit card processing:

  1. Enhanced Data Capture: P-cards are designed to capture detailed transaction data automatically, which aligns with the requirements for Level 2 processing. This includes information like the merchant category code (MCC), tax identification number (TIN), invoice numbers, order numbers, and sales tax amounts.

  2. Streamlined Reporting: The use of p-cards simplifies the process of gathering and reporting the necessary data for Level 2 processing. This can lead to more accurate and detailed transaction records, which is beneficial for both the business and the card issuer.

  3. Lower Interchange Rates: By using p-cards and providing the required Level 2 data, businesses can qualify for lower interchange rates. This can result in significant cost savings, especially for companies that handle a large volume of transactions.

  4. Efficiency and Control: P-cards provide businesses with greater control over employee spending and streamline the procurement process. The detailed data captured can help in monitoring and managing expenses more effectively.

Level 2 Data Line Item Detail Requirements

Level 2 data line item detail requirements are specific pieces of information that businesses need to include for each transaction to qualify for Level 2 credit card processing. These requirements are designed to provide more detailed information about each transaction, which helps in fraud prevention and improves reporting accuracy.

While the core requirements are quite similar across Visa, MasterCard, and American Express, there are slight variations. Visa and MasterCard both require sales tax amounts, customer codes, and invoice numbers, but Visa emphasizes the inclusion of the merchant’s postal code, whereas MasterCard focuses on detailed item descriptions. American Express follows a similar structure but may have specific requirements around how merchant information is presented.

While each network has its nuances, the general aim is the same: to provide detailed transaction data that enhances transparency and accuracy, ultimately benefiting both the merchant and the card issuer. By meeting these detailed requirements, businesses can take advantage of lower interchange rates and more efficient transaction processing.

Here’s a breakdown of what’s generally required, along with a summary of differences between major credit card networks:

Level 2 Processing: Differences Between Credit Card Networks

Visa Level 2 Line Item Detail Requirements

  • Tax Amount: Visa requires the sales tax amount to be included for Level 2 transactions.
  • Customer Code: A unique customer code is needed to identify the buyer.
  • Invoice Number: Each transaction must have an invoice number.
  • Merchant Postal Code: Visa requires the merchant’s postal code to be included.

Mastercard Level 2 Line Item Detail Requirements

  • Tax Amount: Similar to Visa, MasterCard requires the sales tax amount.
  • Customer Code: A customer code is also required.
  • Tax Identification Number (TIN): MasterCard needs the business’s tax ID number.
  • Item Details: MasterCard may require more detailed item descriptions compared to Visa.

American Express Level 2 Line Item Detail Requirements

  • Tax Amount: Sales tax amount is required.
  • Invoice Number: An invoice number must be included.
  • Merchant Information: Detailed merchant information, including the TIN and MCC.
  • Customer Code: Like the others, a customer code is necessary.

No specific transaction volume requirements are mandated to qualify for Level 2 credit card processing. Instead, the qualification is primarily based on the level of detail provided in each transaction rather than the volume of transactions processed.

Payment Gateway Requirements for Level 2 Credit Card Processing

To support Level 2 credit card processing, your payment gateway needs to capture and transmit enhanced transaction data accurately. This includes details like the Merchant Category Code (MCC), Tax Identification Number (TIN), customer tax ID, customer code, invoice number, order number, and sales tax amount. The gateway should also be compliant with the standards set by major credit card networks like Visa, MasterCard, and American Express. Ensuring PCI DSS compliance is crucial to protect against data breaches and fraud. Plus, the gateway should seamlessly integrate with your existing systems, such as accounting software and e-commerce platforms, to streamline the data capture and reporting process.

Your payment gateway should also offer customization options for managing the required Level 2 data fields and support real-time transaction processing and reporting. This ensures you meet the necessary requirements and can promptly address any issues. Robust customer support and training from the gateway provider are also essential, helping you set up the gateway correctly and troubleshoot any problems that arise. It’s important to choose a gateway that can meet these requirements, so your business can qualify for lower interchange rates, with enhanced transaction efficiency and cost savings.

Does Durango Pay Gateway Meet Level 2 Credit Card Processing Requirements?

The Durango Pay Gateway is an ideal solution for Level 2 credit card processing, offering robust features that ensure detailed and accurate transaction data capture. With Durango Pay Gateway, you can easily input and manage essential Level 2 data fields such as Merchant Category Code (MCC), Tax Identification Number (TIN), customer codes, and sales tax amounts. The platform is fully compliant with PCI DSS standards, providing top-tier security to protect sensitive data. Seamless integration with your existing systems, including accounting software and e-commerce platforms, ensures a smooth and efficient process. Durango Pay Gateway also supports real-time transaction processing and offers customizable options to fit your unique business needs. With exceptional customer support and comprehensive training, Durango Merchant Services empowers your business to qualify level 2 credit card processing, bring lower interchange rates and improved transaction efficiency.

Interchange Rates for Level 2 Credit Card Processing for Major Networks

The interchange rates for Level 2 credit card processing vary by network. Here’s a summary for Visa, MasterCard, American Express, and Discover:

Visa: The interchange rates for Level 2 transactions typically range from 1.30% to 2.60%, depending on the specifics of the transaction, such as whether the card is present or not and the type of card used (e.g., rewards card) (Visa).

MasterCard: For Level 2 transactions, the rates generally fall between 1.45% and 2.90%. These rates vary based on the type of card and transaction method (e.g., online vs. in-person).

American Express: Amex interchange rates for Level 2 processing are higher and range from 1.80% to 3.25%. The exact rate depends on the merchant category and transaction details, with specific rates for different segments such as retail, services, and online transactions.

Discover: Discover’s rates for Level 2 transactions range from 1.55% to 2.45%. Similar to other networks, these rates vary based on the type of transaction and whether the card is present or not.

These rates reflect the cost associated with processing transactions that provide enhanced Level 2 data, which helps in qualifying for these specific interchange rates.

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Typical Prices & Fees For Merchant Accounts:

Typical Terms in a Credit Card Processing contract:

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