• Payment Processing Levels

    Determining Your Needs to Help You Save

Payment Processing Levels

What are the levels?

Credit card processing is done in one of three levels: Level I, Level II, and Level III. Each level increase requires more customer and merchant data to be entered with transactions. The additional data reported lowers both risk and interchange rates for the merchant.

Level I Processing

Level I is most common for traditional credit card processing. The processor only needs the card number, expiration date, merchant name, transaction amount, and date to authorize. Transactions at this level are often day-to-day activities of a traditional consumer.

Level II Processing

Level II processing is for merchants who deal with business-to-business processing and higher ticket amounts. This level supports business-to-business processing with less risk and more benefits. It requires more data to help eliminate risk, and the processor is rewarded for this. Merchants who utilize Level II processing will see lower interchange rates, simplified transactions, and improved customer service.

Level II processors must collect the following data, on top of Level I information, with each transaction to reap the total benefits:

  • Merchant name  
  • Transaction amount  
  • Date  
  • Tax Amount  
  • Customer Code  
  • Merchant Postal Code  
  • Tax Identification Number  
  • Merchant Minority Code  
  • Merchant State Code

Level III Processing

Level III processing provides additional discounts to business–to–business or business-to-government processors beyond Level II rates. With these benefits comes the need for even more information collected at the time of authorization. Interchange discounts at Level III are the most competitive. We typically see a 35 basis point decrease from traditional Level I processing.

Level III processors must also collect the following data, on top of Level I and II information, with each transaction to reap the total benefits:

  • Item product codes 
  • Item descriptions 
  • Item quantities 
  • Item tax rates 
  • Ship from postal code 
  • Freight amount 
  • Duty amount 
  • Destination Postal code 
  • Destination country code

Large Ticket Processing

While Level II or Level III processing is deemed an option based on the types of transactions a business is processing, there is a final option to help businesses reach lower interchange rates: large ticket processing. This processing type has the same data requirements as Level III processing, but the qualifications are based on the amount of the sale, not the type of business.

While businesses are not required to employ programs to process at higher levels, the savings for businesses dealing with B2B transactions and large ticket transactions can be significant. 

How much can Level 3 processing save me?

For every $250,000 a year you accept in credit card transactions:

Processing Without
Level 3 Discount

2.7% Processing Fee


Processing With Level 3 Discount

1.9% Rate


Savings with
Level 3 Discount

Save .8% on rates

Save $2,000 annually

How much can Large Ticket processing save me?

If you accept a single $200,000 credit card transaction:

Processing Without
Large Ticket Discount

2.7% Processing Fee


Processing With
Large Ticket Discount

1.4% Rate


Savings with
Large Ticket Discount

Save .8% on rates

Save $2,600

As we just illustrated, the savings potential is extraordinary and can add up quickly. Utilizing the proper processing solution and submitting the correct data will ensure you are receiving the most competitive and beneficial interchange rates possible. The best news is that with some basic software updates you will be able to access these higher–level processing benefits. TeamNPC offers a variety of specialized machines that can help you automatically capture data and qualify your transactions.

National Payment Corporation processes millions of dollars of Level 3 and Large Ticket credit card transactions every year, and has the technology, connections and expertise to help your company start taking advantage of this program today.

For more information on our processing solutions, reach out to us today!

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