Merchant credit card processing is filled with terms that leave many business owners in the dark. One of those terms—Level 3 data—is something all merchants should know, especially if their payments involve higher transaction values or they operate within business-to-business (B2B) or government verticals. Level 3 data is a more extensive report of transaction activity than simple card number, expiration date, and charge amount. For the merchant—and especially those in high-risk industries—understanding the relevance of Level 3 data means ensuring compliance and lower costs, along with increased transparency. Moreover, Level 3 data allows the merchant to create lower interchange rates and a more robust audit trail by capturing and sending more transaction information. For those merchants working with merchant credit card processing companies, Level 3 data can turn a transaction into an opportunity for further strategic financial management beyond payment processing.
What Is Level 3 Data in Credit Card Processing?
Level 3 data is the highest level of payment transaction detail passed to card companies and networks like Visa and Mastercard. The lowest level of data is called Level 1 and only includes the basic transaction amount, card number, expiration date, and maybe a location. Level 2 transactions include Level 1 details with some extra tax or limited purchase information. Level 3 transactions include everything that occurs on a single line-item basis. For example, product name, description, unit price, quantity purchased, shipping or handling amount, tax amount (if applicable), and invoice number; truly, the Level 3 transaction becomes a digital invoice as opposed to a credit card payment activity. Merchants doing large transactions or government jobs typically rely on this information being sent to qualify them for the best processing rates[1].
Why Level 3 Data Matters for Merchants
Merchants often assess credit card approval speed and security rather than understanding what went into creating the payment transaction in the first place. Yet submitting transaction details can paint a more transparent picture that reduces costs and risk alike. When transactions report Level 3 data, it shows merchants are transparent about their activity, which helps minimize transaction risk. Card companies reduce interchange rates in this circumstance to thank businesses for their transparency. For example, reducing transaction fees saves businesses substantial amounts of money over time. Similarly, increased fees are leveled at companies who have many disputes since chargebacks lead regulators and card companies to believe that something suspicious was going on. Level 3 helps prevent risk by keeping detailed records, which minimizes dispute transactions and assists those merchants operating in high-risk industries where ratios are closely monitored[2].
Where Do Cost Savings Come From with Level 3 Data?
The number one financial benefit of Level 3 data occurs due to interchange savings. The more detailed information that is provided during a transaction process, the lower the interchange fee from the card issuing company or network. For B2Bs or with government jobs where average job purchases are between $5,000 and $10,000 just on materials alone for each given project, significant amounts can be saved if merchants get Level 3 qualifying rate reductions. For example, instead of paying 80 basis points on a $10,000 job, a Level 3-eligible merchant can reduce their fee by 30-50 basis points, saving them hundreds over time. Within the course of thousands of transactions, these cost savings transform profit margins. Therefore, merchants who work with merchant credit card processing providers easily qualify for this Level 3 data on a daily basis[3].
How Does Level 3 Data Reduce Risk?
In addition to cost savings, reducing risk is another powerful advantage of acquiring Level 3 data for credit card transactions. The more detailed information provided creates a stronger audit trail when disputes arise. If somebody challenges what they purchased; if merchants have line-item detail as to what’s purchased versus how much was billed, they can justify exactly what they were challenging and what was charged. This is particularly helpful when analyzing high-risk businesses who operate with regulators or banks at every turn; customers who work with these types of businesses want an audit trail just as much as the businesses themselves. Therefore, when merchants can show compliance and reduced risks of costs through the credit card charging ability, they set themselves apart as less risky merchants.
Working With Merchant Credit Card Processing Providers to Obtain Level 3 Data
To qualify for Level 3 data processing providers need to ensure they can capture every transaction detail required/truly related to level three processing. Not every merchant credit card processing provider works at this level—especially not in high-risk environments—so businesses should ensure that all merchant credit card processing partners can work up to that level while also providing tools to acquire enhanced detail entry or automatic integration through ERP systems[4]. Merchants may need training on staff positioning systems/software updates or checkout flows to accommodate; however, this investment will pay off over time in savings and compliance factors.
Where is Level 3 Data Commonly Found?
While it’s mostly found in B2B/Government industries/high-risk ecommerce industries can still use Level 3 data to their advantage. For example, nutraceutical companies face costly compliance fines and regulations to stay afloat; by adopting Level 3 data they can align and reduce costs as well as increase processor relationships. Firearms merchants also face increased fees because of additional regulations; providing Level 3 data helps strengthen audit trails that regulators demand for compliance[5]. Subscription services face chargebacks because customers change payment options; creating a full billing picture positions them as more desirable from a transparency level. When supplement brands use subscriptions, for example, increasing their effective rates when they don’t provide full billing transparency makes their important honest reviewers call it difficult; an aligned payment situation with full transparency reduces costs for all involved.
The Future of Payment Processing and Level 3 Data
As payment processing providers move forward with new technologies; implementing level three will eventually become easier and easier while expected from regulators down the line. Automated tracking will help find fields needed which will reduce the burden on merchants down the line. With increasing demand required by regulators associated with transparency; merchants must learn how to work with these services today if they expect growth tomorrow. Even artificial intelligence will play a role in populating additional fields deemed necessary in the future.
Six Key Components of What Makes Up Level 3 Data
Line-Item Detail
Transactions have listed product names, descriptions, SKU numbers, units/counts purchased. This adds transparency among merchants and customers alike.
Tax Amounts/Duties
Transactions can include exact amounts of taxes owed and paid; duties assessed/waived and exemptions assessed/waived which help support proper compliance among areas.
Shipping/Freight Charges
The associated charges of shipping are included so customers can see how much they pay for products as well as who shipped it.
Invoice/Order Numbers
Unique identifiers link payments to specific invoices or orders, improving record-keeping and reducing administrative errors.
Discount/Unit Pricing
Individual unit prices come through to show applied amounts/discounts versus extended totals. This fosters transparency vs. billing disputes.
Customer Codes/Purchase Identifying Numbers
What's also included with Level 3 data is associated customer codes/purchase identifying numbers for B2B buyers/government code requirements so transactions outline what's required.
FAQ
Q: What is Level 3 Data in Credit Card Processing?
A: It refers to enhanced transaction detail including line item details like what items purchased, tax amount/details/shipping costs/invoice number.
Q: How Does Level 3 Data Save Money?
A: When you provide additional detail you qualify for lower interchange fees from credit card companies when submitted; even for high-value transactions.
Q: Do all Merchant Credit Card Processing Providers Support Level 3 Data?
A: No—not all do—you must work with specific providers who enable level 3 options while providing tools to acquire enhanced detail.
Q: Why is Level 3 Important for High Risk Merchants?
A: It gives less chargebacks/increased audit trails/compliance factors making even high-risk merchants more desirable to processors/banks.
Q: What Industries Use Level 3?
A: B2B/Governments/high-risk ecommerce industries use it significantly because it reduces costs/factors compliance advantages
Sources
- Visa. “Understanding Interchange Rates and Fees.” Accessed August 2025.
- Mastercard. “Level 2 and Level 3 Data.” Accessed August 2025.
- U.S. General Services Administration. “Level III Data in Credit Card Processing.” Accessed August 2025.
- Investopedia. “Interchange Fees Explained.” Accessed August 2025.
- PCI Security Standards Council. “PCI DSS Overview.” Accessed August 2025.
