Level 3 Data Extraction & Processing Benefits

October 2, 2020
4 mins read
Level 3 Data Extraction & Processing Benefits

    Level 3 Data is the golden goose of the payment industry. It allows your business to reduce the fees of card processing, get better rates, gain business intelligence into your company’s spend to meet statutory tax obligations and run your business using data. How does that sound?

    What is Level 3 Data Processing?

    Level 3 data processing is for merchants that can provide their payment processor with a significant additional information on the actual product or service such as line items, product codes, item description, unit price etc…

    Businesses of any size that are currently accepting credit and debit card payments and processing payments through a point-of-sale terminal, mobile card reader like Square or PayPal’s Triangle, or a payment gateway can benefit from having access to Level 3 Data.

    Some of those benefits include;

    • Lower Payment Processing Costs
    • Faster Account Settlements
    • More Customers, More Sales

    More on each below.

    3 Levels of Data for Data Processing

    You are by default set up for Level 1 payment processing. The lowest level with the highest fees. Level 3 is the pinnacle you should be aiming for in order to reduce the fees and rates of processing payments by as much as 50%. Yes you can halve your payment processing fees by using Veryfi for your data extraction and providing Level3 data to your payment processor.

    The Levels Defined

    Level 1 Data

    Any merchant who accepts credit cards complies with this level. It functions as a normal credit card and is authorized and associated with normal transaction data.*

    Merchant’s name
    Purchase amount
    Billing zip code

    Level 2 Data

    Additional data regarding the actual sales such as tax, customer code, purchase number, invoice number etc. is captured at the point of sale. Most of the time it is combined with the merchants information such as Tax ID number, state and postal code data.*

    Everything from Level 1
    Sales tax amount
    Tax indicator
    Customer code
    Merchant postal code
    Merchant tax id
    Invoice number
    Order number

    Level 3 Data

    Significant additional information on the actual product or service is shared such as line items, product codes, item description, unit price and quantities as well as shipping postal code data are needed in addition to the Level 2 requirements.*

    Everything from Level 1 & 2
    Item commodity code
    Product/SKU description
    Product code
    Unit price
    Unit of measure (each)
    Extended price
    Line items totals
    Debit/credit indicator
    Discount amount
    Freight/shipping amount
    Duty amount

    * Card Transaction Descriptions provided by Wikipedia.

    Who is Level 3 Data Processing for?

    • Bill Payment Companies: enable real-time customer bill payment, reduce costs of your transactions and expedite transaction processing.
    • AP Finance Teams: digitize your back office through automation that works for you 24×7 while keeping costs low.
    • New Generation of Expense Management Companies: focusing on hotel folios and business intelligence to encourage smarter employee spend and transparency across the organization.

    If you need data to make smarter business decisions, then look no further.

    Merchant benefits

    Data unlocks new opportunities! Some of those are incentives like savings all the way to new insights for smarter data driven decision making.

    Lower Payment Processing Costs

    Level 3 payment processing from any payment processor (Eg. MasterCard, Stripe) qualifies for substantially lower interchange rates than Levels 1 or 2. The reason for this is fraud reduction. More data, less risk to the payment processor. In exchange you can get a saving of one-percent just by using Level 3. Over the year this adds up to savings in the thousands!

    Faster Account Settlements

    Level 3 data processing of payments to settle accounts yields much faster turnaround time because the processor has enough information to validate the transaction. You are also at this point a low risk merchant and get queue priority.

    More Customers, More Sales

    The world is changing and customers demand a higher level of security and data privacy. Especially if those are government institutions requiring FedRAMP, ITAR or NIST compliance. Without Level 3 data processing you are missing out on the growing customer base and failing to stay with the times in a fast moving world.

    Customer benefits

    Integrating Level 3 line item detail into your ERP system or an accounting system brings value to your customers through:

    Automated Data Entry

    Elimination of the biggest burden in accounting / ERP platforms, manual data entry of Level 3 data for transaction processing!

    Reduced Fees

    Lowers transaction fees which makes your ERP or accounting system more valuable.

    Sales Opportunities

    Your customers can now sell to any customer with a purchase card or to a government agency.


    Tax Reporting

    Monitor internal spend for easier tax reporting.

    Business Intelligence

    Control employee spend through allowance policies, daily quotas, merchant-specific restrictions, etc.


    Time is Money. Track transactions from inception to settlement.

    Traditional methods suck

    Doing this using machines is hard. It requires businesses to venture into the machine vision and machine learning territory which very few companies have the knowledge, skills and resources to maintain and train the AI.

    Therefore; traditionally Level 3 data extraction has been done using:

    • Humans end to end or human-in-the-loop sacrificing customer’s personal identifiable information (PII) for a wizard of Oz approach or
    • Using templates for each vendor. This is not only a time burden to maintain hundreds of templates for each vendor invoice but if the vendor updates their invoice it’s a chore that leads to customer frustrations why the processing of the payment failed.

    Don’t worry, there is a much faster, hands free and data privacy safe method called Veryfi.


    See it for yourself 👇

    Try it below or contact us on sales@veryfi.com

    Have Questions? Email us sales@veryfi.com