If you sell to other businesses or government agencies and you accept their corporate or purchasing cards, you're probably paying interchange rates that are significantly higher than they need to be. The fix isn't switching processors or renegotiating your rate. It's sending more data with each transaction.

This is called Level 2 and Level 3 processing, and most B2B merchants have never heard of it.

What the levels mean

Every card transaction sends data to the card network. The amount of data determines which "level" the transaction qualifies for:

  • Level 1 — the basics: card number, expiration, transaction amount, date. This is what a standard retail swipe sends. It's all that's needed for consumer cards.
  • Level 2 — adds: customer code (like a PO number), sales tax amount, and merchant postal code. Required to qualify for reduced rates on commercial cards.
  • Level 3 — adds: line-item detail for every product in the order, including item description, quantity, unit cost, commodity code, and unit of measure. This is the full invoice, embedded in the transaction.

Consumer credit cards don't care about levels. But commercial cards — corporate cards, purchasing cards (P-cards), and government cards — are designed to carry this data. And when you send it, the card networks reward you with substantially lower interchange rates.

How much you save

The savings are dramatic. On a Visa commercial card:

  • Level 1 (no extra data): interchange around 2.5%–2.95% + $0.10
  • Level 2 (tax + customer code): drops to roughly 2.0%–2.10% + $0.10
  • Level 3 (full line-item detail): drops further to roughly 1.45%–1.55% + $0.10

On a $5,000 B2B invoice paid by corporate card, that's the difference between $147 in interchange and $77 — a savings of $70 on a single transaction. For businesses processing $50,000 or more per month in B2B card payments, Level 3 qualification can save $500–$1,000 monthly.

Mastercard has similar tiers with comparable savings.

Who should care about this

Level 2/3 processing matters most for:

  • Wholesalers and distributors accepting corporate P-cards
  • B2B service providers billing via commercial cards
  • Government contractors — GSA and federal purchasing cards specifically require Level 3 data for optimal rates
  • Office supply, industrial supply, and MRO companies with large per-order values
  • Any business where the average B2B ticket exceeds $500

If you sell directly to consumers and rarely see a corporate card, this doesn't apply to you. But if even 20% of your volume comes from business or government cards, the savings are worth pursuing.

How to enable it

Getting Level 2/3 processing requires three things:

  1. A processor that supports it. Not all do, and some charge extra for the capability. Ask your processor directly: "Do you support Level 2 and Level 3 data submission?" If they say no, or if they charge a premium that eats the savings, shop around.

  2. A POS or payment gateway that captures the data. Your checkout system needs to collect and transmit the required fields. For Level 2, that means capturing sales tax and a customer reference code. For Level 3, it means passing line-item detail (description, quantity, unit price, commodity code).

  3. Proper configuration. Even if your system supports Level 2/3, it may not be turned on. Many gateways have a setting for "enhanced data" or "Level 2/3 processing" that needs to be explicitly enabled. Your processor or gateway provider can walk you through this.

For ecommerce businesses, most major gateways (Authorize.net, NMI, PayTrace) support Level 2/3 data through their API. If you're using a custom integration, you'll need your developer to include the additional fields in the transaction request.

Common mistakes

  • Not sending sales tax. Level 2 requires a tax amount even if it's $0.00. If the field is blank, the transaction won't qualify.
  • Missing commodity codes. Level 3 requires a standard commodity code for each line item. Your gateway documentation will have a lookup table.
  • Assuming your processor handles it automatically. They don't. You have to send the data — the processor just passes it through.

The bigger picture

Level 2 and Level 3 processing is one of the few places in payment processing where the merchant has real control over the rate they pay. It requires some upfront configuration, but once it's set up, every qualifying transaction automatically costs less. No negotiation required — the savings come from the card networks themselves.

If you're processing B2B payments and you've never heard of Level 2/3, pull your last statement and look at the interchange categories. If you see "Standard" or "Data Rate I" on your commercial card transactions, you're paying more than you should.