Level III Processing Can Help Merchants Reduce Costs

by Mary Beth Eddy 0

If you are a merchant that accepts credit cards, then you know that the payments you accept are processed through an intricate network of providers. Several factors affect who touches a payment. However, all payments are required to pass through the Card Networks—Visa, MasterCard, American Express, and Discover.

When a payment passes through the Card Networks, a fee known as Interchange is collected. Interchange is set by the Networks, and that is why many merchants believe there is no way to reduce this specific fee.

Although rates are set in advance by the Network, lower rates can be applied to payments that meet certain criteria. If the payment gateway passes Level III card data with a transaction, the details that are provided enable the networks to identify which transactions qualify for lower Interchange rates.

The Card Networks use many factors to determine Interchange for these transaction types, including the card type, the amount of the transaction, and whether or not the card was present at the time of the sale. For example, a $10,000 transaction that is made via a purchasing card on the Internet will be charged a different rate than a $100 transaction that is made via a pin-less debit card that was presented at the point of sale.

When this level of detail is included with qualified transactions, it can significantly reduce costs. However, not all processors pass Level III data. Of those that do, some charge for the service and others do not. If you are evaluating potential payment processing providers, it may benefit you to add Level III processing to the list of features that you would like to assess.

About Mary Beth Eddy
Mary Beth Eddy brings more than 25 years of experience in the merchant services industry, most recently working for Worldpay before joining the Payway team in 2014. In addition to building relationships with potential customers, she also manages the company’s affiliations with First Data Merchant Services and CPay. However, what really makes Mary Beth happy is hearing all the positive testimonials from existing customers of Payway.