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What is Level 3 Credit Card Processing?

By May 31, 2023June 5th, 2023No Comments

Level 3 credit card processing is a cost-effective way to process B2B (business to business) or B2G (business to government) transactions. There are several criteria that must be met; however, merchants that use level 3 credit card processing for qualifying transactions can save a considerable amount on their fees, making the effort well worthwhile.


Level 2 credit card processing: applies to corporate, commercial, government, and B2B credit cards; requires less data as part of the settlement. This is less costly than Level 1 processing, but does not offer as many discounts as Level 3 processing.



Level 1 credit card processing: applies to standard B2C (business to consume) transactions; requires only standard information, such as merchant code and date. Level 1 transactions are processed at the standard rate and appear on your merchant statement as STD or STAN.


What qualifies as a level 3 transaction?

Transactions need to meet certain criteria to qualify for level 3 processing rates. The main criteria include:

  • The type of card the customer uses – Only corporate purchasing cards (p-cards) and government cards are eligible for Level 3 payment processing. Personal credit cards used for standard B2C purchases do not qualify.
  • The time frame in which you settle – To qualify for Level 3 processing rates, merchants need to settle in a timely manner. Automating your daily batch settlements can help you settle faster and with less manual effort to meet this requirement.
  • The authorization and settlement amounts – The settlement amount should not exceed the authorization amount to quality for Level 3 processing rates.
  • The specific line-item details / data fields you provide in your settlement – Visa and Mastercard require different information to qualify a transaction for Level 3 processing. These data fields include:
Visa Mastercard
Discount amount Tax amount
Freight/shipping amount Tax indicator
Duty amount Tax ID
Item commodity code Customer code
Item quantity Item quantity
Product code Product code
Item descriptor Item descriptor
Unit of measure Unit of measure
Unit of cost Extended item amount
Discount per line item/total Debit / credit indicator
Ship-to zip code
Destination country
Ship-from zip code
VAT information (tax amount, rate, and invoice number)

This may seem like quite a bit of data to provide. However, you don’t have to enter it all by hand, and you don’t have to submit it for every transaction.

Curbstone makes level 3 credit card processing simple. Our technologies help you collect and submit these data fields on transactions that could qualify for a level 3 rate.

After you run a card, our portal determines whether the transaction is Level 3-eligible. For transactions that do qualify, our technologies help you build a data file with the required fields to send when you settle. This helps you capture the maximum discounts on each transaction, with less manual work.

What technologies do you need to support Level 3 credit card processing?

Curbstone is specifically designed to support level 3 credit card processing. However, this isn’t standard functionality in all payment gateways, countertop terminals, or point-of-sale systems. Similarly, companies like PayPal and Stripe are not currently able to collect and pass Level 3 data. If you want to use Level 3 credit card processing, you’ll need to make sure your payment processing technologies can collect and pass the required data.

You’ll also need to make certain configurations to your system. Here too, Curbstone can guide you through the setup process and take some of the burden off your IT team. We’ll walk you through the details – from merchant categories and commodity codes to security configurations and settings – to get you started as quickly as possible.

Saving money with Level 3 credit card processing

Here’s where all the effort pays off.

Because credit card processors consider Level 3 payments “less risky” than Level 2 and Level 1 transactions, they can offer a lower rate for these transactions. The discount can be – on average – between .75 and 1.15 percent. In some cases, higher-volume transactions qualify for even higher discounts.

This can help you significantly reduce your payment processing fees if you do a high volume – or a high dollar amount – of B2B or B2G business. (Note – we’ve worked with companies who have thousands of B2B transactions per month, but also companies who have one single large B2B transaction per year. If you think you might be a good candidate, let us know and we’ll be happy to help you calculate your potential savings!)

Learn more about Level 3 credit card processing

Interested in learning more about lowering your credit card processing fees with Level 3 transactions? Contact us today to start the conversation.