Level 2 and Level 3 data, and the rates most B2B merchants never see.
The card networks publish cheaper interchange categories for commercial card transactions that arrive with purchase order numbers, tax amounts and line-item detail. Qualifying is a configuration and workflow question, not a pricing negotiation, and almost nobody is told about it.
What this page settles.
Three questions, in the order most people ask them.
What the levels actually are
Every card transaction carries data. How much data decides which interchange category it can qualify for, and the card networks publish three broad tiers.
Level 1 is a standard transaction: card number, expiry, amount, merchant details. Every sale is at least this. For consumer cards it is the only level that exists in practice.
Level 2 adds a small set of commercial fields — typically a purchase order or customer code, a sales tax amount, and a tax indicator. A handful of fields, sent with the authorization.
Level 3 adds line-item detail: individual products or services, quantities, unit prices, item codes, freight and duty amounts, ship-from and ship-to postcodes. Substantially more data, and substantially more work to produce.
The fields themselves are unremarkable. What matters is that supplying them can move a commercial card transaction into a cheaper published interchange category.
Why the networks price it this way
It is not arbitrary, and understanding the logic tells you when it will and will not help.
Commercial and purchasing cards exist so that businesses can control and reconcile spending. A company issuing purchasing cards to its staff wants to know what was bought, from whom, with what tax, against which purchase order. That data has to come from the merchant, because nobody else has it.
So the networks price the incentive directly: supply the data the commercial card programme needs, and the transaction costs less. Do not supply it, and it is priced as a general commercial transaction, which is one of the more expensive things you can accept.
That is also why it does not apply to consumer cards. There is no corporate reconciliation to feed, so there is no cheaper category to qualify for.
Whether this applies to you
Two questions, and the first one is decisive.
Do your customers pay with commercial, corporate, purchasing or government cards? If you sell to consumers, the answer is essentially no and you can stop reading. If you sell to other businesses, to public bodies, or to anyone whose staff carry a company card, the answer may be a large share of your volume.
What proportion of your volume is it? This is the number that decides whether the work is worth doing, and it is on your statement. On itemized interchange-plus pricing you can read the categories directly. On tiered pricing you cannot, and the commercial cards are almost certainly part of what is arriving as a non-qualified surcharge — ask your provider for the breakdown.
The businesses where this matters most, in rough order: wholesalers and distributors, professional services invoicing other firms, suppliers to government and education, industrial and trade suppliers, and anyone selling to companies large enough to run a purchasing card programme.
What qualifying actually requires
Three things have to line up, and the third is where most attempts fail.
Your processor and gateway have to support it. Level 2 is widely supported. Level 3 is a genuine capability and not every platform has it. Ask specifically, and ask for Level 3 rather than accepting “we support commercial cards”.
The fields have to be populated. Not present in the form — actually sent, with valid values, on the authorization. A tax amount of zero where tax applies will not qualify. An empty purchase order field will not qualify.
The data has to come from somewhere in your workflow. This is the real obstacle. Level 2 usually means asking the customer for a purchase order number and making sure the tax amount is transmitted, which is a small change. Level 3 means your invoicing or ERP system has to hand the payment system a full line-item breakdown, which for many businesses means an integration rather than a setting.
Which is why the honest sequence is: get Level 2 working first. It is a fraction of the effort and it captures a meaningful part of the benefit. Treat Level 3 as a project with a business case, not a switch.
The most common failure is a merchant told they are “set up for Level 2” who is not actually transmitting the fields. Ask for transaction-level evidence that the data arrived, not an assurance that the capability exists.
Why your provider may not have mentioned it
Worth saying plainly, because merchants find it irritating when they discover this years in.
Under tiered pricing, a transaction qualifying for a cheaper interchange category does not necessarily make your bill smaller. Your rate is a bucket. If the underlying cost falls and the bucket does not, the difference stays with the processor. So there is no particular incentive to help you qualify.
Under interchange-plus, interchange is passed through at cost. A cheaper category means a cheaper bill for you, directly and visibly, and your provider’s margin is unchanged. The incentives line up.
That is not an accusation of bad faith; it is just how the two models work. But it does mean that if you are a B2B merchant on tiered pricing, you are in the one arrangement where this page cannot help you until the pricing changes.
Getting it working
A practical sequence:
- Find out what share of your volume is commercial cards. Ask your provider. Get a number.
- Confirm your gateway and processor support Level 2, and separately, Level 3.
- Switch to a pricing model where the saving reaches you. Otherwise the rest is effort for somebody else’s benefit.
- Turn on Level 2 and capture the fields. Purchase order or customer code, and the correct tax amount. Train whoever takes the orders.
- Verify with real transactions. Ask for evidence that the data arrived and that the category changed. This is the step people skip.
- Then look at Level 3, with a view of what the integration costs against what the remaining volume is worth.
And one caution: do not send a tax amount where tax does not apply, or invent a purchase order number to populate a field. Qualifying on inaccurate data is not a saving, it is a misrepresentation in the transaction record.
What we charge
Interchange + 0.50% + 10¢ in person, interchange + 0.75% + 25¢ keyed. Interchange passes through at cost, which is the arrangement that makes any of this worth doing — when a transaction qualifies for a cheaper category, the saving is yours rather than ours.
Send us a statement and we will tell you how much of your volume is commercial cards, what it is currently costing, and whether Level 2 alone is enough to be worth the bother.
While we are on the subject
Does this work on consumer cards?
No. The cheaper categories exist for commercial, corporate, purchasing and some government cards. Sending extra data on a consumer card transaction does not reduce its interchange.
Is this the same as interchange optimization?
It is the most substantial part of what that phrase usually means. Interchange optimization also covers things like settling on time and sending address data, but Level 2 and Level 3 is where the large money is for a B2B merchant.
Do I need a special gateway?
You need a gateway and a processor that support passing the fields, and in the case of Level 3 that is a genuine capability rather than a checkbox. It is worth confirming before you assume you can.
How much does it actually save?
It depends entirely on what proportion of your volume is commercial cards and which categories they currently land in. Anyone quoting you a percentage without having seen your statement is guessing.