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What Are Level 2 and Level 3 Interchange Programs?
If your business accepts payments from other businesses, government agencies, or large organizations, you may be paying more in credit card processing fees than necessary.
Many companies are unaware that Visa and Mastercard offer special interchange programs for commercial card transactions. Known as Level 2 and Level 3 processing, these programs reward merchants that submit additional transaction information by qualifying eligible payments for lower interchange rates.
For businesses with significant B2B sales, the savings can be meaningful, often with little or no change to the customer payment experience.
Understanding Interchange
Every time a customer pays with a credit card, a portion of the processing fee is paid to the bank that issued the card. This fee, called interchange, is set by Visa and Mastercard and varies depending on factors such as:
- The type of credit card used
- Whether the payment is in-person or online
- Your industry
- The information submitted with the transaction
Most consumer purchases only require basic payment information. Commercial card transactions are different. Businesses and government organizations often require additional data for accounting, purchasing, and expense management. To encourage merchants to provide this information, the card networks offer lower interchange rates when enhanced transaction data is included.
Level 1 vs. Level 2 vs. Level 3
The easiest way to think about the different levels is that each one simply adds more information to the transaction.
| Transaction Level | Information Included | Typical Use |
|---|---|---|
| Level 1 | Basic payment information, card details, merchant, amount, date | Consumer purchases |
| Level 2 | Level 1 plus tax amount, invoice number, purchase order number, customer reference | Business and government payments |
| Level 3 | Level 2 plus detailed line-item information such as products, quantities, unit prices and freight | Large B2B, government and purchasing card transactions |
The more complete the transaction data, the more likely an eligible commercial card payment is to qualify for reduced interchange.
Which Businesses Benefit Most?
Level 2 and Level 3 programs are designed primarily for businesses that sell to other businesses rather than directly to consumers.
Industries that commonly benefit include:
- Manufacturing
- Wholesale and distribution
- Technology and software
- Healthcare suppliers
- Construction suppliers
- Professional services
- Government contractors
- Educational suppliers
If a meaningful percentage of your customers pay using corporate, purchasing, or government cards, these programs are worth investigating.
How Much Can You Save?
The exact savings depend on the card type, industry, transaction size, and payment processor. Businesses processing a significant amount of commercial card volume commonly reduce their processing costs by 10 to 40 basis points (0.10% to 0.40%) on qualifying transactions.
For example:
| Annual Commercial Card Volume | Potential Annual Savings* |
| $1 million | $1,000 to $4,000 |
| $5 million | $5,000 to $20,000 |
| $10 million | $10,000 to $40,000 |
Actual savings depend on card mix, interchange qualification, and processor configuration. While these percentages may appear modest, they compound quickly as transaction volume grows.
What Do You Need to Qualify?
Simply accepting commercial credit cards isn’t enough. Your payment system must also capture and transmit the additional information required by Visa and Mastercard.
In many cases, businesses already have this information within their ERP, accounting, or invoicing software. The missing step is ensuring that it is sent with the payment transaction.
A typical implementation includes:
- A payment processor that supports Level 2 and Level 3
- A compatible payment gateway
- An ERP or invoicing system capable of supplying the required data
- Proper transaction mapping between your systems
For many businesses, enabling Level 2 or Level 3 processing is much simpler than expected because much of the required information already exists.
Is It Worth Implementing?
If your customers primarily use personal credit cards, the impact may be limited. However, businesses with meaningful B2B sales often find that Level 2 and Level 3 processing provides one of the highest-return opportunities for reducing payment costs.
Once configured correctly, qualifying transactions continue to receive lower interchange rates automatically, without requiring customers to change how they pay.
How Clearly Payments Can Help
At Clearly Payments, we help businesses identify opportunities to lower payment processing costs through better pricing, payment optimization, and Level 2 and Level 3 interchange qualification.
Our team can help you:
- Review your current payment environment
- Estimate how much of your processing volume may qualify
- Confirm whether your payment gateway supports enhanced data
- Recommend the simplest implementation approach
- Estimate the potential annual savings
For businesses processing a meaningful amount of commercial card volume, these programs can deliver ongoing savings year after year.
Get Level 2 and Level 3 Payment Processing
- Transparent pricing, no hidden fees
- Built for USA and Canada businesses
- Easy setup, no disruption to your business
Have a question about your payment setup?
Clearly Payments can review your processing setup, pricing or payment technology.
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