Processing Levels Explained Levels 1, 2 and 3

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.

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:

  • 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

You can find yourself saving a large amount off interchange rates when you achieve Level 2 & Level 3. REDDEX and its knowledgeable team members can make this process easy for your business. Email us at for more information.