Level 1, 2 and 3 Processing Explained

Credit card processing is sorted into three categories—Level 1, Level 2 and Level 3 (Level I, Level II and Level III). The benefit of Level 2 and 3 processing is the opportunity to significantly reduce the cost of accepting payments. When you acquire a new merchant account, you’ll be placed into one of these 3 levels. Your credit card processing interchange rates are dependent on which level your merchant account has been assigned. Each level is determined by the amount of information (data) collected for each transaction.

Level 1 Processing (Level 1 Card Data)

The majority of businesses will be processing under Level 1. Business to consumer (B2C) merchants such as retail shops, e-tailers, restaurants – essentially, any businesses that take a majority consumer credit card payments. Level 1 processing only requires that the data include merchant name, transaction code and transaction date.
B2B and B2G

Do you qualify for Level 2 or 3 Processing?

Call us to find out!


Program Level 1/Standard Level 2 Level 3
Visa Commercial  2.05% + $0.10  1.85% + $0.10
Visa Commercial Card Present  2.50% + $0.10 2.05% + $0.10  1.85% + $0.10
Visa Commercial Card Not Present  2.65% + $0.10 2.05% + $0.10  1.85% + $0.10
 MasterCard Data Rate I   2.65% + $0.10 2.00% + $0.10 1.75% + $0.10
 MasterCard Data Rate II  2.81% + $0.10 2.16% + $0.10  1.91% + $0.10
 MasterCard Data Rate III  2.86% + $0.10 2.21% + $0.10 1.96% + $0.10
 MasterCard Data Rate IV  2.96% + $0.10 2.31% + $0.10  2.06% + $0.10

Level 2 and 3 Processing (Enterprise Solutions)

Level 2 Processing (Level 2 Card Data)

Business to business (B2B) merchants will likely fall under the Level 2 category. These merchants will be accepting business, corporate and purchasing cards. At this level, the amount of information needed is greater than Level 1 processing. This includes the standard information required for Level 1 processing as well as data such as merchant zip code, customer code, sales tax, etc.

Level 3 Processing (Level 3 Card Data)

Like Level 2 processing, merchants that achieve Level 3 processing are going to be accepting a large amount of commercial cards and/or government cards from businesses and government agencies (B2G). The difference between the two is again, the amount of data/information requirements, with Level 3 processing demanding the most additional data points. Under Level 3 processing, merchants get the best rate by providing all data points of Level 1 & 2 processing as well as the below Level 3 processing data points:

Level 3 (including Level 2) Level 3 interchange rates are up to a full 1.00% lower than their standard

  • Ship-From Zip Code
  • Destination Zip 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
Level 2 and Level 3 Rates

You can find yourself saving a large amount off interchange rates when you achieve Level 2 & Level 3. Group ISO and its knowledgeable team members can make this process easy for your business. Call us to learn how at 1-800-722-4476.

Data Requirements

Data Level 1 Level 2 Level 3
 Merchant DBA Name  x  x  x
 Transaction Amount  x  x  x
 Transaction Date  x  x  x
 Customer Code    x  x
 Merchant Postal Code    x  x
 Tax amount    x  x
 Tax ID    x  x
 Merchant Minority Code    x  x
 Merchant State Code    x  x
 Item Product Code      x
 Item Description      x
 Item Quantity      x
 Item Unit of Measure      x
 Item Extended Amount      x
 Item Net / Gross Indicator      x
 Ship From Postal Code      x
 Freight Amount      x
 Duty Amount      x
 Destination Postal Code      x
 Destination Country Code      x
 Alternate Tax Amount      x

ERP / Accounting Software Integration

Many Level 2 and Level 3 processing-qualified merchants will find it beneficial for their companies to integrate the merchant account to their ERP/accounting software, such as Sage® and QuickBooks™. Group ISO makes the integration seamless.
erp software integration