Most people love to shop where they have the freedom to use their preferred method of payment. Given this, most clients are into the use of credit cards considering that they get to enjoy payment convenience and the rewards. Businesses owners accepting credit card payments are to benefit in this line since they will have more clients. It is important to be aware of the cost of accepting cards as well. Card brands themselves and processors will have their own costs. Level 2 and level 3 processing is a way to reduce that cost.

What is Level 3 processing?

Today, more businesses are carrying out more B2B and B2G transactions in their operations. For most of these transactions, there is a need to capture data about who is involved in the purchase process, what they buy, and how they do it. The information also needs to be integrated with the payment data and delivered electronically to the issuer. When business owners are looking to achieve all that, level 3 processing can come in handy in the process. Despite that, level 3 process was initially created to lower spending on part of the government, it has become an integral part of business operations.

Benefits of Level 3 processing to businesses

  • Level 3 processing allows most businesses to save a substantial amount in their B2B transactions. Business owners achieve that when they use specific level 3 processing and integrate their online accounting system.
  • Business owners can get extra information when they are using Level 3 processing in the transactions. Businesses benefit from extra information when they need to know about any fraudulent transactions taking place. With extra information about the transactions, it is easier for businesses to avoid any losses.
  • Increasing sales and the number of customers. Given the increase in the number of corporations that are using level 3 processing, an upgrade in this line ensures that you are tapping into a pool of potential customers.
  • Fast account settlement. Businesses with cash flow problems are more likely to benefit from Level 3 processing since they ensure that transactions are executed quickly.

How to achieve these savings

For level 3 processing to be achieved, there exist conditions in place that must be met.

  • Eligible cards. Considering this, merchants will need to accept purchasing cards, corporate cards, and government spending accounts that are issued by Visa or MasterCard.
  • Businesses need to use a sophisticated technology platform. Given that the equipment in use may be outdated, businesses may need to update such to ensure they achieve level 3 processing.
  • Additional information about a transaction. Details such as invoice number, item commodity code, and freight amount among others are needed when you want to achieve Level 3 processing.

What is interchange optimization?

When any company is running credit cards, there exist costs to be paid in this line. Therefore, your interchange fees will increase when you have more transactions. Considering that there is variability in the calculation of the interchange fees, businesses need to ensure that are paying minimum fees. Even more, card issuers charge higher interchange fees when they have less information about any transaction. For you to qualify for the least expensive interchange rate possible, you need to use a system that captures correct and required data about the transaction. It is easier for any business to realize such an objective when they consider interchange optimization. Such a system helps in determining what data the card issuer wants, and gives them such.

Merchants that need interchange optimization

Most large businesses that transact in foreign sales have been using interchange optimization systems but smaller merchants are also encouraged to use such. The following merchants could benefit from employing an interchange optimization system.

  • Companies dealing in B2B transactions
  • Firms that sell to government
  • Merchants that use hand keyed cards and e-commerce businesses

Ways to know if you qualify for interchange optimization systems

  • Transaction value. You may also know if you qualify to use these interchange optimization systems based on the transaction amount.
  • The type of customers you deal with in your operations. Mostly, you need to have customers that use B2B or B2G cards.
  • The gateway you are using. The use of a gateway that supports the interchange optimization systems is also commendable when you want to achieve the lowest interchange fee.
  • Pricing models. You qualify to use interchange optimization systems if the pricing structure in place supports the system.


Benefits of Level 2 and Level 3 Card Processing

When businesses opt for level 3 card processing systems, they have benefits they can expect in this line.

  • Faster payment. If you have cash flow issues to sort out, interchange optimization can take care of that since it guarantees a 12-hour payment.
  • Invoice customers enjoy flexibility. Since most of the businesses are using the web portal or email-based pay now buttons, their customer enjoys convenience meeting such.
  • Reduce liability. Losses occurring through payment processes can be avoided when you opt for interchange optimization. With interchange optimization systems, you get to use secure technologies that limit any form of loss.


Choosing a suitable processor

For most business owners, challenges will come their way when it comes to determining what level of interchange optimization work for them. However, you can overcome such when you opt for the following techniques.

  • Reviewing all levels of merchant statements. With such a review, you seek to check the pricing model in use, the number of transactions, and the dollar amount among other elements.
  • Getting expert help. There exists experts who are well trained in the analysis of merchant statements and they can help out. From the expert analysis done, they can help pick a suitable interchange optimization level that works for your business.


Businesses looking to lower their credit card processing fees and are yet to consider Level 3 processing and interchange optimization should consider making that shift. Level 2 and level 3 processing should always be a conversation. Despite that some changes to the business operations will be necessary, such a shift is needed to ensure that the least fees are paid even when the transactions are more. It is also commendable to embrace this shift as it will help win more clients in the future.

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