How To Optimize Transaction Costs With Level 3 Processing

credit card with floating white circles that have a "3" in the center.
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As a merchant service provider, PayFrog is on a mission to partner with small businesses across the United States to give them a simple, secure, and cost-effective payment processing solution. As longtime merchant service experts, our team has learned the ins and outs of credit processing and what it means for small businesses. That includes the money-saving techniques that can be implemented to help businesses operate, like the level of processing used. 

Level 3 credit card processing allows for lowered transaction fees when a business-to-business transaction takes place. As most businesses buy goods and services from other businesses, this leaves a money-saving opportunity for companies to take advantage of. With an average of 0.5 percent savings, accessing the benefits of level 3 processing is essential for small businesses. 

What Is Level 3 Credit Card Processing?

As the most popular form of payment, credit cards have become the primary source for transaction processing. However, accepting credit card payments can often put a financial burden on businesses due to the extra processing fees that accompany them. Fortunately, there are some money-saving techniques that can be implemented – including the level of processing used. 

Level 3 credit card processing refers to the type of processing that occurs when a business-to-business transaction takes place. Because additional transaction data is sent to card brands during a level 3 transaction, the risk of fraud and transaction fees are lowered. This means that every time an individual makes a purchase at your business with a company card, a level 3 transaction takes place. Lowered fees are made available because passing enhanced purchase data to the card brands lowers risk, which in turn qualifies transactions for a lower interchange rate. These savings are passed down to merchants if they take the needed steps to qualify for level 3 credit card processing. 

How to Qualify For Level 3 Credit Card Processing

In order to access the benefits of level 3 credit card processing, you must first receive payment through a company card. This may be a bit difficult to discern since many business cards don’t look different than a typical consumer credit card. Next, the additional data fields must be filled with the needed information. Currently, there are an additional 15 fields of data that must be filled per purchase for a level 3 transaction. While this may seem like more work than the savings are worth, fortunately, merchant service software like pay junction can do the majority of the work for you. This will save you from having to manually input extensive data and dealing with discerning if a credit card belongs to a company or an individual. 

Level 3 Processing Rates Savings 

For businesses that accept a lot of B2B transactions or government card payments, qualifying for level 3 rates can produce significant savings. This is especially true for businesses that have high average sales. On average, level 3 processing rates can save you roughly 0.5 percent on processing rates. However, many businesses have seen closer to one percent savings on overall processing rates. If you are debating if level 3 processing is something you want to pursue for your business, remember that one percent savings can significantly add up over time. 

Start Saving With PayFrog

At PayFrog, our goal is to ensure that your small business’ finances are set up for success. Merchant services can often feel more like a burden than a convenience for small business owners. However, with PayFrog’s carefully designed transaction processing system hardware and software, you can save money and time. Our software includes a level 3 processing program that can detect and collect the needed data to qualify for processing rate savings. If you are ready to start saving on costly credit card processing rates, contact us today! We look forward to working with you.


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