Level 3 Credit Card Processing: B2B, B2G & Purchasing Cards

Nathan Beck
June 24, 2024
2:15 pm

What is Level 3 Credit Card Processing?

Level 3 credit card processing was created by Visa and Mastercard specifically for business-to-business (B2B) and business-to-government (B2G) transactions that have a lot of detailed data requirements to help with transparency and tracking. Level 3 processing requires data such as item descriptions, quantities, unit prices, tax amounts, and shipping details and other detailed information. By providing this extra information, businesses can qualify for lower interchange rates, which can add up to major cost savings, especially for high-volume or high ticket transactions. Level 3 processing has the additional benefit of providing you better reporting, stronger fraud protection, and helps you comply with government and big corporate client requirements. It was designed to make transactions more efficient, cut down on fraud, and provide detailed tracking for both businesses and government entities.

Very high transaction volumes are needed to qualify for level 3 credit card processing. For example, both Mastercard and Visa require 20,000 to one million ecommerce transactions per year. Mastercard requires

Who is Durango Merchant Services?

Durango Merchant Services is a specialized payment processing company founded in 1997, focusing on high-risk industries and level 2 and 3 credit card processing, segments often overlooked by traditional banks and payment processors. Our level 3 credit card processing service caters specifically to Business-to-Business transactions, Business-to-Government Transactions and enables the use of purchase cards. Understanding the unique challenges faced by companies that qualify for level 3 credit card processing, we provide tailored services to ensure reliable payment solutions that meet and exceed regulatory requirements. Our mission is to offer support and customized payment processing options that address the specific needs of these sectors, helping them thrive despite the complexities of their industries.

What Sets Durango Merchant Services Apart from the Rest?

Deep understanding of level 3 processing needs
Robust network of banking relationships
State-of-the-art payment processing gateway that can pass level 3 data
Customer specific consulting to help get approval
Omni-channel payment support
Recurring billing capabilities
24-48 Hour Payouts

Focusing on the growth and stability of our clients
Personal account manager with 10+ years of experience
eCheck Processing through ACH
Solid reputation in the payment industry
Ten's of thousands of merchants placed
Premium service for all our clients

What are Level 3 Credit Card Processing Requirements?

Level 3 credit card processing requires a lot more detailed data than standard transactions, aimed at making things smoother and cheaper for B2B and B2G transactions. You need to provide specifics like item descriptions, quantities, unit prices, tax amounts, and shipping details. The greater detail required for level 3 processing ensure transparency and accuracy so merchants can qualify for lower interchange rates. This detailed info has the added advantage of supporting better reporting and security, making it easier to manage expenses and reduce fraud risks.

What Role Do Purchase Cards Have in Level 3 Processing and Are They Required?

No, you don’t need a special purchase card to use Level 3 processing. However, purchase cards (P-Cards) can play a big role here, because they streamline the purchasing process and capture all the necessary Level 3 data automatically, making expense management easier and more efficient. Other benefits of P-Cards are that businesses can enjoy enhanced security features and better cash flow management, amplifying the benefits of Level 3 processing. Regardless of whether an entity is using a p-card, it is important to submit all the required data to maintain good standing with Level 3 credit card processing requirements and maintain lower interchange rates.

One more detail worth noting here is that if a customer uses a p-card, whether commercial or government at a payment terminal that is not level 3 compliant, then the merchant will be charged the same interchange rate as normal transaction and will not receive the preferential rates that are a hallmark of level 3 credit card processing.

Level 3 Line Item Detail Requirements

Level 3 credit card processing for both Visa and Mastercard requires you to provide a lot of detailed item information, like descriptions, quantities, unit prices, and tax amounts, which helps you get lower interchange rates and better reporting. This data transparency is the cornerstone for B2B and B2G transactions. Not all credit card networks require the same level 3 data, making it important to learn about these subtle variations . As an example, Visa and Mastercard having slightly different requirements for level 3 credit card processing. Mastercard generally has stricter data fields and requires more detailed line-item info compared to Visa, which has more standardized requirements that are applicable across different transaction types. So, while both aim for detailed accuracy, Mastercard might demand a bit more granularity in your data. Below is a detailed list of the data reporting requirements of visa and Mastercard. It’s important to talk with your account manager about any updates to the policies of major credit card networks.

Visa Level III Line Item Detail Requirements

For Visa Level 3 processing, you need to provide detailed transaction data beyond the basic information required for Level 1 and Level 2 processing. Here are the required item details for Visa Level 3 transactions:

Merchant Information:
- Merchant Name: The name of the merchant.
- Merchant Postal Code: The postal code of the merchant’s location.
- Merchant Tax ID: The tax identification number of the merchant.
Transaction Information:
- Transaction Date: The date the transaction took place.
- Invoice Number: A unique invoice number for the transaction.
- Order Number: The purchase order number related to the transaction.
- Customer Code: An identifier for the customer or account.
Line-Item Details:
- Item Description: A detailed description of each item purchased.
- Product Code: A unique code identifying each product.
- Quantity: The number of units for each item.
- Unit of Measure: The unit in which the item is measured (e.g., each, dozen, pounds).
- Unit Price: The cost per unit of each item.
- Extended Item Amount: The total cost for each line item (quantity multiplied by unit price).
- Discount Amount: Any discounts applied to each line item.
- Commodity Code: A code used to classify the item for tax purposes (if applicable).
Shipping and Tax Details:
- Freight Amount: The shipping cost for the transaction.
- Duty Amount: Any applicable duty charges.
- Tax Amount: The total tax amount for the transaction.
- Ship-from Postal Code: The postal code from where the goods are shipped.
- Destination Postal Code: The postal code of the shipment’s destination.
- Destination Country Code: The country code of the shipment’s destination.
- Tax Identification Number: The tax ID related to the transaction.

Mastercard Level 3 Line Item Detail Requirements

Mastercard Level 3 processing requires specific item details to qualify for lower interchange rates and enhanced transaction reporting. Here are the required item details for Mastercard Level 3 processing:

Item Product Code: A unique code identifying the item.
Item Description: A detailed description of each item purchased.
Item Quantity: The number of units of each item.
Item Unit Measure: The unit of measure for the item (e.g., each, box, case).
Item Extended Amount: The total cost for each line item (quantity multiplied by unit price).
Item Unit Cost: The cost per unit of each item.
Item Discount Amount: Any discounts applied to the item.
Item Commodity Code: A code identifying the type of item, often used for categorizing products.
Item Gross Net Indicator: Indicates if the item amount includes tax.
Item Tax Rate: The tax rate applied to the item.
Item Tax Amount: The total tax amount for the item.
Item Total Amount: The total amount for the item, including tax and discounts.

Additionally, the following details about the overall transaction are often required:

Merchant Name: The name of the merchant.
Merchant Tax ID: The merchant’s tax identification number.
Customer Code: A code identifying the customer or account.
Invoice Number: A unique invoice number for the transaction.
Order Number: The purchase order number related to the transaction.
Ship-from Postal Code: The postal code from where the goods are shipped.
Destination Postal Code: The postal code where the goods are shipped to.
Destination Country Code: The country code of the shipment destination.
Freight Amount: The shipping costs.
Duty Amount: Any applicable duty charges.
Total Tax Amount: The total tax amount for the transaction.

American Express Level 3 Line Item Detail Requirements

For American Express Level 3 processing, the required item detail includes specific data fields that provide comprehensive information about each transaction. These details are necessary to qualify for lower interchange rates and improve transaction transparency and accuracy. Here are the key required item details for American Express Level 3 processing:

Item Description: A detailed description of each item purchased.
Item Quantity: The number of units of each item purchased.
Item Unit Price: The cost per unit of each item.
Extended Item Amount: The total cost for each line item (calculated as Item Quantity multiplied by Item Unit Price).
Discount Amount: Any discounts applied to the transaction.
Tax Amount: The total tax amount applicable to the transaction.
Freight Amount: The shipping costs associated with the transaction.
Duty Amount: Any applicable duty charges.
Order Number: The purchase order number related to the transaction.
Invoice Number: A unique invoice number for the transaction.
Customer Code: A code identifying the customer or account.
Merchant Postal Code: The postal code of the merchant’s location.
Ship-from Postal Code: The postal code from where the goods are shipped.
Destination Postal Code: The postal code where the goods are shipped to.
Tax Identification Number: The merchant’s tax identification number.
Destination Country Code: The country code of the shipment destination.

Very high transaction volumes are needed to qualify for level 3 credit card processing. For example, both Mastercard and Visa require 20,000 to one million ecommerce transactions per year. Mastercard requires

Payment Gateway Requirements for Level 3 Credit Card Processing

To process Level 3 credit card transactions, your payment gateway needs to be capable of capturing and transmitting the extensive transaction details required by the credit card networks. This means the gateway should support detailed data fields such as item descriptions, quantities, unit prices, tax amounts, shipping costs, and more. Ensuring your payment gateway is Level 3 compliant is crucial because this detailed data allows you to qualify for lower interchange rates, resulting in significant cost savings. Look for a gateway that integrates seamlessly with your existing systems, like your accounting or ERP software, to streamline data entry and ensure accuracy. The gateway should also offer robust reporting tools that can handle the enhanced data, providing you with detailed insights into your transactions.

Additionally, the payment gateway must have strong security measures to protect the sensitive data being processed. This includes compliance with PCI DSS standards, encryption, and fraud detection tools. Since Level 3 transactions involve more detailed data, having advanced security features is essential to mitigate the increased risk of fraud. The gateway should also offer excellent customer support, ensuring any issues can be quickly resolved, minimizing downtime and disruptions. By choosing a payment gateway that meets these requirements, you can effectively manage your Level 3 transactions, take advantage of lower processing fees, and maintain a secure and efficient payment processing system.

Does Durango Pay Gateway Meet Level 3 Credit Card Processing Requirements?

The Durango Pay Gateway and virtual terminal offer robust Level 3 credit card processing capabilities, making it an excellent choice for businesses handling high-value B2B and B2G transactions. Durango Pay Gateway supports detailed transaction data entry, including item descriptions, quantities, unit prices, tax amounts, and shipping costs, which helps qualify for lower interchange rates. The platform is PCI DSS compliant, ensuring state-of-the-art security for sensitive data, and integrates seamlessly with various accounting and ERP systems to streamline operations. Durango Pay Gateway also provides advanced reporting tools and fraud detection features, making it a secure and comprehensive solution for managing complex transactions efficiently and securely.

Interchange Rates for Level 3 Credit Card Processing

Here are the current interchange rates for Level 3 processing for Visa, Mastercard, and American Express:

Visa Level 3 Interchange Rates:

Corporate & Purchasing Cards: 1.90% + $0.10 per transaction.
Large Ticket Corporate & Purchasing ($8,725+): 1.45% + $35 per transaction.
Large Ticket Government ($5,984+): 1.20% + $39 per transaction (CreditDonkey) (Verisave).

Mastercard Level 3 Interchange Rates:

Corporate, Purchasing & Fleet Cards: 1.80% + $0.10 per transaction.
Business Card Level 1: 1.75% + $0.10 per transaction.
Business Card Level 2: 1.91% + $0.10 per transaction.
Business Card Level 3: 1.96% + $0.10 per transaction.
Large Ticket Corporate, Purchasing, & Fleet ($7,254+): 1.25% + $40 per transaction.
Large Ticket Business Card Level 1 ($7,254+): 1.20% + $40 per transaction.
Large Ticket Business Card Level 2 ($7,254+): 1.36% + $40 per transaction.
Large Ticket Business Card Level 3 ($7,254+): 1.41% + $40 per transaction (CreditDonkey) (Verisave).

American Express Level 3 Interchange Rates:

American Express offers enhanced data programs similar to Level 3 processing. The specific rates and requirements can vary and often involve direct agreements for large businesses processing over $1 million annually in Amex transactions. The rates and specifics for Level 3 data can be tailored based on the business and transaction volume (Verisave).

By meeting the detailed data requirements for Level 3 processing, businesses can take advantage of these lower interchange rates, resulting in significant cost savings, especially for high-value transactions.

Typical Prices & Fees For Merchant Accounts:

Typical Terms in a Credit Card Processing contract:

Free Application Processing
Rolling reserve requirements that range from: 0% to10%
Variable contract lengths including availability of month to month
Direct financing with regular deposits
Minimum processing: $5,000 minimum for US accounts, $50,000 for international accounts

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