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About Level-III Processing

About Level-III Processing

(for educational purposes only)

Background

Commercial Enterprises that sell primarily to other Businesses (B2B) or to the Federal Government (B2G) may accept Visa/MasterCard/AMEX purchase cards for payment from their customers. When accepting commercial purchase cards or credit cards, the only way to substantially reduce the interchange rate and therefore the fees paid on each transaction is to provide Level-3 data (enhanced product information) about a transaction to the Processor (e.g., First Data, Global Payments, TSYS, Vital, Elavon, Chase/Paymentech) and to the Association (Visa/MasterCard).

What is the Potential Financial Impact?

The reduction in the discount rate could be 50 basis points (0.5%) or substantially higher depending upon the discount rate you currently pay. By going to Level-3 processing, it is not uncommon for a Company (Merchant) to save $50,000 to $100,000 per year in fees. This is additional profit for the Commercial Enterprise which is acheived without having to make additional sales revenue!

Definition

Level-3 is illustrated in the table below.