5 Level III Processing Requirements To Reduce Merchant Fees

Business to business merchants seek processors that support level III processing, however, not all solutions are equally effective at helping merchants qualify for level 3 interchange rates.

interchange management

Automated interchange management combined with level III processing maximize merchant profits.

  1. The merchant must have merchant account with a processor that supports level III data. Processors often have multiple platforms and not all their platforms support level III data.
  2. The merchant must also have a qualified MCC code, the business type that goes on the merchant application. For example, manufacturers, distributors, automotive new car dealers, parts retailers have qualifying MCC codes.
  3. The merchant needs a system to submit level III data. The two common types are desktop software and payment gateways. Cloud payment gateways provide numerous benefits vs desktop software.
  4. The authorization and settlement amount must be equal.
  5. The settlement must occur within the required time. The initial authorization is valid for 24 hours for retail and 72 hours for MOTO (mail order, telephone order key entered) and ecommerce. After that, while the transaction is usually honored by the card issuer, it does not qualify for the lowest interchange rate because the authorization is invalid.

Merchants should seek payment solutions with automated interchange management tools, in compliance with payment acceptance rules. Additionally, if using an integrated payment gateway solution, ask a payments professional with expertise in interchange rates to review interchange qualification. Errors or omissions that impact interchange rate qualification are common, however, once fixed, non-qualified transactions generally do not reoccur.


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