What is level 3 processing and why is it a good thing?

What is level 3 processing and why is it a good thing?

What is level 3 processing

Payment gateways handle corporate purchase card transactions differently than consumer purchases. In a nutshell level 3 processing is the difference between providing more vs less information regarding a purchase transaction.

Here is are the layman’s terminology for the different levels of processing

  • Level 1 is used with consumer transactions, provides limited purchase data back to the cardholder, and provides limited purchase data to the gateway.
  • Level 2 adds more information to benefit the corporate, government, and industrial buyers, but because hardware-based Point of Sale (POS) terminals are used again there is a limit to the purchase data provided to the gateway.
  • Level 3 provides the most amount of detail to the payment gateway. The data provided is equivalent to the line item information found on an itemized invoice.

If you’ve ever worked with a payment gateway you’ve probably been introduced to their fraud prevention controls (sometimes referred to as velocity controls). Payment gateways and credit card are great at reducing their risk with transactions (and thereby increasing their margins).  This is the leverage you have as a merchant who can provide a PCI Level 3 integration.

Here is a sample of the type of data that is passed at the different levels of processing.

Data Point Level 1 Level 2 Level 3
Transaction Amount (Total)
Tax Amount
Customer Code (30 Char)
Merchant Postal Code
Tax Identification
Merchant Minority Code
Merchant State Code
Ship from Postal Code
Destination Postal Code
Invoice Number
Order Number
Item Product Code
Item Commodity Code
Item Description
Item Quantity
Item Unit of Measure
Item Extended Amount
Freight Amount
Duty Amount

Why is level 3 processing a good thing

Processing your transactions as a b2b merchant with level 3 detail allows you to have more leverage over the interchange rates that can be used and in effect allow you to lower your card processing fees, leaving more money on the table for your business.

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