What is Level 2 and Level 3 Credit Card Processing?

Level 2 and Level 3 credit card processing refer to different types of data required for processing transactions, primarily for business-to-business (B2B) and business-to-government (B2G) purchases. These enhanced data levels provide additional information beyond the basic Level 1 data (such as the card number, expiration date, and transaction amount) to facilitate more detailed reporting, better expense management, and improved security.

Level 2 Processing:

Level 2 processing adds supplementary information to the transaction, which is typically required for corporate or commercial card transactions. Examples of Level 2 data include:

1. Merchant name and location
2. Sales tax amount
3. Customer code or purchase order number
4. Invoice number
5. Tax identification number
6. Tax amount

Level 3 Processing:

Level 3 processing involves even more detailed data, usually for larger corporate, government, or purchasing card transactions.

Level 3 data often includes:

1. All Level 1 and Level 2 data
2. Item product code
3. Item description
4. Item quantity
5. Item unit of measure
6. Extended item amount (quantity x unit cost)
7. Freight amount
8. Duty amount
9. Line item discount

Level 2 and Level 3 processing are beneficial for businesses because they can result in lower interchange rates, better expense tracking, and improved transaction security. However, not all payment processors support Level 2 and Level 3 processing, and additional software or hardware may be required to facilitate these transactions.