Level 2 and level 3 processing
There are three levels of card processing available through Payment Services:
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Level 1 is the most common, requires less information and therefore generally incurs higher interchange fees compared to transactions processed with Level 2 or Level 3 data, which are usually related to corporate and purchase credit cards.
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With level 2 and level 3, Payment Services customers on interchange plus plus (IC++) pricing who accept a lot of purchase card or corporate card transactions can potentially receive a lower processing rate by allowing Payment Services to send more information about a transaction. If the transaction qualifies, according to the card network requirements, then the merchant may receive a lower processing rate for a particular transaction.
See What is IC++? in PayPal developer documentation for more information.
Level 2 and level 3 processing data enables merchants to lower their IC++ pricing if they provide some additional details about the purchase that reduces the processor risk and provides beneficial aspects:
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Large customers will be paying less by providing this processing data.
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Customers are less likely to run into fraudulent situations since the orders have more information.
However, card networks, like Visa and Mastercard, ultimately determine whether a transaction qualifies for level 2 or level 3 processing:
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Level 2 data contains additional information, such as the tax amount for the order, or the customer code or PO number.
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Level 3 data is more detailed information about the sale, which helps to qualify for even lower interchange rates compared to Level 2. Level 3 data contains information like a description of the item purchased, the quantity of units purchased, unit of measure for the items ordered, and other specific details.
Payment Services collects this data and provides detailed reporting of your payment transactions.
Level 2 and level 3 card payment transactions in Payment Services
To qualify for level 2 or level 3 processing, merchants must send the previous information, although it is the card networks who ultimately determine which level a transaction qualifies for when processing it.
See the Payment processing FAQ in PayPal developer documentation for more information.
Level 2 and level 3 processing is disabled by default for Payment Services merchants at store level.
Level 2 and level 3 processing are available if you are already using IC++ pricing. To enable this feature you can do this via the Command-line Interface (CLI.