How Level 2 and Level 3 Credit Card Processing Lowers Interchange Fees
April 16, 2026
Level 2 and Level 3 credit card processing refers to the additional transaction data merchants can submit to qualify for lower interchange rates on commercial card payments.
When implemented correctly, this can significantly reduce payment processing costs B2B businesses, SaaS platforms, and marketplaces.
However, the landscape has changed. As of January 2026, Visa has retired its Level 2 program, meaning Level 3 data (now part of its Commercial Enhanced Data Program, or CEDP) is the primary path to interchange savings on Visa commercial cards.
This guide explains:
What Level 2 and Level 3 processing actually are
What data you need to submit
Which card types qualify
How much you can realistically save
And how to implement it correctly
What are the three levels of credit card processing?
Credit card transactions are categorized into three processing levels based on how much data is submitted at the time of authorization.
The more detailed and structured the transaction data, the lower the perceived risk for card networks, and the lower the interchange rate for eligible transactions.
Comparison overview
Level | Data required | Eligible cards | Interchange impact |
|---|---|---|---|
Level 1 | Basic transaction data | All cards | Standard rates (highest) |
Level 2 | Level 1 + summary business data | Commercial cards (network dependent) | Lower than Level 1 |
Level 3 | Level 1 + Level 2 + line-item detail | Commercial cards | Lowest available rates |
Level 1 processing
Level 1 is the default for all card transactions and includes standard payment data such as:
Card number
Expiration date
Billing ZIP/postcode
Transaction amount
Transaction date
Merchant category code (MCC)
All merchants operate at this level unless additional data is submitted.
Level 2 processing
Level 2 processing adds summary-level business data to the transaction, such as:
Sales tax amount
Tax indicator
Customer reference or PO number
This additional data can qualify certain commercial card transactions for lower interchange rates.
Note: Visa retired its Level 2 program in January 2026. For Visa commercial card transactions, Level 3 data (Product 3 under CEDP) is now required to qualify for any interchange savings.
Mastercard Level 2 processing is still supported.
Level 3 processing
Level 3 processing includes all Level 1 and Level 2 data, plus detailed line-item information about the transaction.
This typically includes:
Item descriptions
Quantity and unit cost
Product or commodity codes
Line item totals and discounts
Shipping, duty, and tax amounts
Invoice and order numbers
Shipping origin and destination
Because this provides the highest level of transaction transparency, it qualifies for the lowest interchange rates on eligible commercial cards.
What data fields are required at each level?
Level 1 data fields
Card number
Expiration date
Transaction amount
Transaction date
Merchant name
Merchant category code (MCC)
Level 2 data fields
Sales tax amount
Tax indicator
Tax ID (in some cases)
Customer code, PO number, or reference ID
Note: Visa Level 2 is no longer applicable for most commercial transactions as of 2026. Mastercard continues to support Level 2.
Level 3 data fields
Includes all Level 1 and Level 2 data, plus:
Item description
Item quantity
Unit of measure
Unit cost
Product or commodity code
Line item total
Discount per line item
Freight or shipping amount
Duty amount
Ship-from ZIP/postcode
Destination ZIP/postcode and country
Invoice number
Order number
To qualify for Level 3 rates under Visa’s CEDP, data must be complete, accurate, and structured correctly, not just partially populated.
Which card types are eligible for Level 2 or Level 3 processing?
Not all card transactions qualify for Level 2 or Level 3 interchange rates. Eligibility depends on the card network and the type of card used.
Quick overview
Card type | Level 2 eligible | Level 3 eligible | Notes |
|---|---|---|---|
Visa commercial cards | ❌ (retired in 2026) | ✅ | Level 3 (CEDP/Product 3) required for savings |
Mastercard commercial cards | ✅ | ✅ | Supports both Level 2 and Level 3 |
American Express | ✅ | ❌ | Level 3 not supported |
Consumer credit cards | ❌ | ❌ | No L2/L3 savings available |
Visa
Level 2 and Level 3 processing historically applied only to commercial credit cards (e.g. corporate, business, and purchasing cards).
As of 2026, Visa has replaced its legacy Level 2 and Level 3 programs with its Commercial Enhanced Data Program (CEDP). Under this model:
Level 2 is no longer supported
Level 3 (Product 3 data) is required to qualify for reduced interchange rates
Business credit cards are now eligible for these enhanced rates
Mastercard
Mastercard continues to support both Level 2 and Level 3 processing for:
Commercial credit cards
Commercial debit cards
Commercial prepaid cards
This gives merchants more flexibility, particularly if they are not yet passing full Level 3 data.
American Express
American Express supports Level 2 processing only. Level 3 data does not provide additional interchange benefits for Amex transactions.
Consumer cards
Level 2 and Level 3 processing does not apply to consumer credit or debit cards, regardless of how much data is submitted.
This is a key limitation: If your customers primarily pay with consumer cards, implementing Level 2/Level 3 processing will have little to no impact on your overall processing costs.
How much can you save?
Level 2 and Level 3 processing can significantly reduce interchange costs for eligible transactions.
While exact rates vary by card network, card type, merchant category code (MCC), and transaction details, the difference between levels is significant.
Illustrative rate comparison
Processing level (card network-dependent) | Typical interchange range |
|---|---|
Level 1 | ~2.7% – 3.0% |
Level 2* | ~2.3% – 2.6% |
Level 3 | ~1.7% – 2.1% |
*Level 2 savings are no longer available for Visa transactions as of 2026, but still apply to some Mastercard and American Express transactions.
Level 3 transactions can reduce interchange costs by up to 1 percentage point or more compared to Level 1.
Example: monthly savings
A B2B SaaS platform processing $100,000/month in commercial card volume:
At Level 1 rates (around 2.9%), that same volume would result in roughly $2,900 in interchange. At Level 3 (around 1.9%), costs fall to about $1,900.
Estimated savings: ~$1,000/month or ~$12,000/year.
Important considerations
Savings only apply to eligible commercial card transactions
Not all transactions will qualify, even with correct data
Rates vary by network and interchange category
Implementation effort (especially for Level 3) should be weighed against volume
Visa vs. Mastercard: What’s different?
While both networks support enhanced data programs, their requirements and structure differ.
Visa
Level 2 retired as of 2026
Level 3 (CEDP / Product 3) is the only path to savings
Strong emphasis on data accuracy and validation
Mastercard
Supports both Level 2 and Level 3
Less rigid validation requirements compared to Visa
Broader eligibility across credit, debit, and prepaid
Key takeaway
Visa is moving toward a single, stricter standard (CEDP)
Mastercard maintains a more flexible, multi-tier model
Who should use Level 2 and Level 3 processing?
Level 2 and Level 3 processing is not most effective for businesses that process a high volume of commercial card transactions, where interchange savings can outweigh the effort required to implement additional data fields.
For B2B-focused businesses, the impact can be substantial. SaaS platforms, for example, often bill other businesses using corporate cards. By passing the required Level 3 data alongside each transaction, they can reduce processing costs without changing pricing or customer behavior.
The same applies to businesses that sell into government entities. Purchasing cards (P-cards), commonly used in public sector procurement, are among the transactions most likely to qualify for the lowest interchange rates when Level 3 data is provided correctly.
Marketplaces and platforms also benefit, particularly when they charge subscription fees, commissions, or service fees to business users. In these cases, payments are frequently made with commercial cards, making Level 3 optimization a meaningful lever for improving margins.
That said, this approach isn’t always worth pursuing. If your transaction volume is low, or if most of your customers pay with consumer cards, the operational overhead of implementing Level 3 may outweigh the savings. This is especially true if your payment flow doesn’t naturally capture the required line-item data.
How to implement Level 2 and Level 3 processing
The most important requirement for actually qualifying for lower interchange rates is timing. The necessary data must be passed at the moment of authorization. It cannot be added later, and incomplete submissions won’t qualify for reduced rates.
From a technical perspective, both your payment processor and your gateway or API integration must support Level 2 and Level 3 data fields. Even if you collect the right information, it won’t have any impact unless it’s structured and transmitted correctly during the transaction.
For teams building custom integrations, this typically means mapping billing, invoicing, or order data into the required payment fields and ensuring consistency across transactions.
Finix simplifies this process. With Finix’s low-code solution, compliant Level 2 and Level 3 data can be passed automatically for eligible transactions, reducing the risk of errors and missed savings opportunities. For teams with custom integrations, Finix provides the flexibility to submit detailed transaction data while maintaining full control over the payment experience.
For merchants processing Visa transactions specifically, it’s also important to account for recent changes to interchange qualification requirements.
What Is Visa’s CEDP and what does it mean for Level 2 and Level 3?
Visa’s Commercial Enhanced Data Program (CEDP) replaces its legacy Level 2 and Level 3 interchange programs with a single, modernized standard for commercial card transactions.
Beginning in late 2025, Visa introduced stricter validation of Level 3 data. As of January 2026, Level 2 processing has been fully retired. This means that for Visa commercial cards, Level 3 data (referred to as Product 3 under CEDP) is now the only path to reduced interchange rates.
Unlike the previous model, simply submitting additional fields is no longer enough. Data must be accurate, complete, and structured correctly to qualify. Transactions that don’t meet these standards may not receive reduced rates, and in some cases, can be downgraded.
For a deeper breakdown of how CEDP works and what’s required, see our full guide.