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Understanding Levels 1, 2, and 3 Data

Understanding Levels 1, 2, and 3 Data


There are three levels of data that determine authorization and interchange pricing. All transactions require information to be authorized, but certain transactions require more information than others. The amount of data required for a transaction determines if it is a Level 1 transaction, a level 2 transaction, or a level 3 transaction, and these levels can have an effect on interchange rates. 

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Level 1

Level 1 is the most basic level of data, and it is the most common as well. This is what most consumer transactions fall under, and it requires the least amount of data to be authorized. The data required for level 1 transactions are merchant name, merchant code, date, and purchase amount.

Level 2 

Level 2 data is commonly used in business-to-business transactions. Along with the four data fields required for level 1, level 2 requires five additional pieces of data: sales tax amount, customer code, merchant zip code, merchant tax ID number, and applicable women- or minority-owned merchant status. 

Level 3

Level 3 requires the highest level of data to authorize a transaction. If you process almost exclusively B2B or business-to-government sales, you’ll likely have to enter Level 3-required data. For level 3 processing, all of the information that is required for levels 1 and 2 are required, plus invoice and order numbers, ship-to and ship-from zip codes, item product code & description, item extended amount & unit of measure, freight amount, quantity, discount amount, and duty amount. Find out more about Level 3 Processing here.

Merchants who want to qualify for the lower interchange rates associated with levels 2 and 3 should speak with their processor to determine if it’s a feasible decision for their business and what they can do to accept it. Not all businesses need to process transactions that require levels 2 and 3 data, especially not if they’re primarily selling to consumers. Contact PayArc today to speak with someone about our Level 3 Processing program.

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