If you’re a business that accepts debit or credit card payments, you know that payment processing is not as simple as it sounds.
For example, do you understand the distinctions between Level 1, Level 2, and Level 3 data and the cost impact on your business?
If not, you’re in the right place. We’re going to explain all of that and more, including:
The differences between Level 1, Level 2, and Level 3 data
Why Level 3 data processing is better
The eligibility criteria for Level 3 and how you can integrate it into your business.
Deciphering Payment Processing Data
George is the CFO of a government contractor. He is frustrated with the headaches caused by high interchange rates and processing fees, concerns about the security of client data, and laborious manual payment processes and reconciliations that eat up his staff’s valuable time.
A colleague mentioned Level 3 data processing and UST’s integration with Microsoft Dynamics 365 Business Central, and George was interested in finding out more.
Let’s review what he learned from his research.
L1, L2, and L3 Data - What’s the Difference?
There are four primary differentiators between the three data levels in payment processing:
The amount of transaction data each includes
The types of transactions they’re best suited for
The interchange rates associated with each level
Their applicability to different business scenarios
Here’s what’s generally required according to each level:
Level 1 payment process: This process is generally used for standard retail consumer purchases and includes basic transaction data such as the business’s name, transaction amount, and transaction date. For a consumer in-store purchase, also known as a “card-present” transaction, no additional data is required to lower the applicable Visa/MasterCard or AMEX interchange fee. For a sales transaction conducted over the phone or via eCommerce, also known as “card-not-present,” the corresponding interchange rates are higher because card-not-present transactions are more susceptible to fraud.
Level 2 payment process: Level 2 is commonly used in B2B transactions where a business may need more detailed information for tax and accounting purposes. In addition to the data in Level 1, Level 2 transactions comprise more information, such as tax amount, customer code, and merchant category code, to qualify for slightly lower interchange rates.
Level 3 payment process: The best interchange rates are applied to transactions that include detailed transaction data, including product descriptions, quantities, and unit prices, as well as discounts, freight, and other details, in addition to Level 1 and Level 2 data information. Note that Level 2 and Level 3 data can only be reported to Business Card, Corporate Card, and Purchasing Card holders, which explains why these lower interchange rates are applicable in business-to-business (B2B) transactions.
Why Level 3 Approval Benefits Businesses:
Level 3 is a unique payment processing method that helps merchant services providers reduce the costs and security risks associated with credit card processing.
Level 3 data provides the most comprehensive transaction information.
This level of granularity is especially valuable to businesses that deal with complex or large transactions, especially business-to-business (B2B) and business-to-government (B2G) companies.
Enhanced Security. As we see regularly in the news, the security of payment data is an anxiety-inducing concern. According to a report from AAG, data breaches cost businesses an average of $4.35 million in 2022, and one in two American internet users had their accounts breached in 2021.
Because Level 3 data provides more detailed information about transactions to the credit card networks, fraud risk is reduced.
Lower costs. Processing fees can be up to 30% lower with Level 3 transactions because they require a specialized payment gateway that can capture additional and more detailed transaction data. In addition, interchange rates are lower with Level 3 data approval because there’s less chance of chargebacks from the credit card companies.
Compounding Benefits with Microsoft Dynamics 365
George learned volumes from his research, but what he didn’t expect to discover was the transformative payment processing benefits of USTPay integration already built into the Microsoft Dynamics 365 platform.
Companies that partner with USTPay and use Dynamics 365 Business Central benefit from seamless integration for easier payment management and faster, more secure credit card, check, and ACH payment processing.
Other benefits of USTPay integration include:
Cards are qualified at the lowest rates to save on processing fees,
Payments can be processed anywhere, and payment data automatically syncs to Dynamics 365 Business Central, so double data entry is eliminated.
Customer credit card data is tokenized and stored offsite, so the business collecting payments cannot access full credit card data.
Improved reporting and analytics tools for advanced insights into metrics, better expense management, and tracking.
Detailed transaction data that helps B2B and B2G companies save even more money, optimize processes, and grow revenue
Desktop and mobile apps for convenient access from anywhere.
The ability to schedule batch transaction reports to be delivered daily to your inbox.
Easier compliance and audits, especially for B2G companies, due to more detailed transaction data.
Criteria for Level 3 Eligibility
Level 3 approval is generally limited to business-to-business or business-to-government organizations due to the level of detailed information required, such as detailed line-item data.
Your organization must be in compliance with the Payment Card Industry Data Security Standard (PCI DDS), and there may be other specific requirements depending on the card network you work with.
A New Reality with USTPay
Now that George’s company has been using a payment gateway solution designed for Level-3 data, its interchange and processing fees are almost 30% lower.
And through Business Central integration, the company efficiently manages and receives payments faster and more securely than ever.
Level 3 data is more than an upgrade; it’s a strategic advantage that can empower your business to thrive as you navigate the complexities of payment processing.
Are you ready to learn more about how the Dynamics 365 Business Central and USTPay integration can be the secret sauce to help your organization thrive in the ever-evolving world of payments providers and payment processing?
We’d love to hear from you.
About the Author:
U.S. Transactions Corp., a premier B2B enterprise service provider, collaborates with its clients to deliver an exceptional experience every time, from industry-lowest rates and cutting-edge technology to Level-3 processing that can save your organization up to 30 percent on costs!
Since 2009, UST has been a trusted source for Commercial Enterprises, Associations, and Nonprofits looking to maximize their success rate through superior payment solutions designed specifically for them.