What Is Level 3 Credit Card Processing And How Can It Help Your Business?

Level 3 Credit Card

The average person doesn’t consider the VISA or Mastercard in their pocket to be any different from a company or government credit card – aside from the limit, of course. But there are actually significant differences in how corporate and government cards are used and processed. Those differences mean that not all merchants can accept all types of credit cards, and they also change the way issuing banks view transactions. The result is that merchants who can process these special credit cards – known as Level 3 cards – stand to benefit greatly.

 

Not All Credit Cards Are Created Equal

Banks categorize credit cards differently based on what types of cards they are and, more specifically, what’s required to use them. The credit cards consumers carry in their wallets that make up the vast majority of transactions are classified as Level 1 cards. Level 2 cards are often used for B2B purchases and require extra data to be captured in order to be processed. Finally, the largest corporate and government transactions are done using Level 3 cards, which require even more data to be captured and offer additional control to the cardholder, and additional assurances to the bank.

 

The Benefits of Level 3 Processing

The primary benefit of Level 3 cards to cardholders is the control they offer over card use. To the bank, Level 3 cards represent more fraud-proof transactions thanks to the enormous amount of information that needs to be collected to use the card. In return, the bank offers lower interchange fees to Level 3 payment processors – a kind of reward for the work required to handle all the extra data collection. The savings on those fees add up quickly, and that’s a huge benefit to the end merchant’s bottom line. As a result, companies that deal with larger corporate clients or government agencies should really consider upgrading their payment handling to include Level 3 data capture.

 

Getting Set Up to Take Advantage of Level Three Payments

Processing Level 3 transactions requires the capture of 15 to 20 additional line items on top of the data normally recorded on Level 1 card purchases. Those line items include things like invoice numbers, unit prices, item descriptions, and more. It’s a lot of data to capture, and doing it manually is a headache at best, and an enormous time-sink at worst.  Luckily, some electronic payment processors, like BAMS, can automate the capture and reporting of Level 3 data, allowing merchants to reap all the benefits of accepting Level 3 payments with none of the nightmarish manual data management.

With that in mind Level 3 processing isn’t appropriate for all businesses. At BAMS, checking for Level 3 optimization eligibility is part of our five-step price comparison process and one of the first steps in all of our partnerships. In addition to reduced fees, merchants that do begin accepting Level 3 cards open up a whole new world of high-end clients that other companies simply don’t have access to, so contact us today to find out how we can help your business begin accepting these valuable payments

Understanding EMV Payment Card Technology

Credit Card Transaction Using the New Security Electronic Chip Technology EMV

Updating payment equipment by companies to chip cards with embedded microchips has added a level of security to businesses and their customers. Fraudulent transactions risk has significantly reduced due to chip cards technology. Implementing point-to-point encryption reduces payment card fraud from counterfeit cards. The liability shift from financial institutions favors applying EMV technology to great effects.

The only challenge which companies are facing is putting in place EMV systems that bonds seamlessly with their specific EMV hardware.

What is EMV?

EuroPay, MasterCard, Visa (EMV) is a form of payment that bonds plastic cards with microchips. EMV cards, unlike normal credit cards, generate particular code for every transaction its user makes. The issuing bank shares the code to ensure it is legitimate. The microchip codes generated cannot be replicated, thus ensuring security against creating counterfeit cards by thieves.

Why Create EMV Card?

To curb hackers from stealing and selling credit card information that creates counterfeit cards, EMV was developed. Creating a card that generates random codes for every transaction ensures a minimal chance for counterfeit cards. The challenge, however, is that EMV cards are only helpful where a card can be inserted or swiped into a point of sale. Tokenization and point-to-point encryption eliminate card data breaches.

What Entails EMV Compliance?

EMV compliance requires installing point-of-sale terminals which are EMV-enabled and certified by a particular bank and ensuring that payment application is EMV certified for every card network. Depending on user’s application of EMV compliance, the terminal cost ranges significantly. Users ensure these terminals are installed with the EMV-compliant software.

What are EMV Security Weaknesses?

EMV cards are only applied where payment cards can be used in a point of sale. Online transactions which are highly fraudulent are not protected. Payment card security experts have concluded that hackers can still access unencrypted payment information from personal account number by removing the codes generated. EMV reduces fraud while point-to-point encryption eliminates fraud.

Companies that use debit and credit cards as a form of payment should consider becoming EMV compliant to significantly reduce fraud while also providing other benefits to a company such as the liability shift. Contact us now for more information.

Chargeback Prevention Starts with Fraud Prevention

Dollar sign with arrow around icon vector, filled flat glyph, solid colorful pictogram isolated on white. chargeback symbol, logo illustration

Chargeback prevention is one of the foremost concerns of online merchants. It’s always galling to have to send money in the wrong direction, and it’s even worse when the reason for it is outright fraud. With fraud, you’re not only out a sale but often, you lose your merchandise as well. Fortunately, there are ways to catch most of it before your products hit the shipping stream.

Use a Merchant Account with Fraud Prevention Tools

A merchant account that offers the right settings will, when those settings are properly tuned and activated, do much to increase your chargeback prevention success. Some of the typical options include automatic checking of the delivery zip code against the zip code of the credit card holder’s billing address, checking the card number against a database of stolen numbers, use of the Cardholder Dispute Resolution Network, instant notification of payment disputes, and more. The Cardholder Dispute Resolution Network is a fairly new system that allows chargeback and dispute information to be shared between card issuers and merchants and can let you spot a serial refund-seeker before you complete a transaction.

Manually Check Any Suspicious-Looking Order That Gets Through

Sometimes, even the best automated systems aren’t enough. This is why you should always check strange-looking orders – especially those for unusually-large amounts of merchandise – for fraud. Check Google Street View to see if the destination address is a vacant lot, look up the phone number the customer gave you as well as calling it, and check the origin area of the IP attached to the order.

These are some of the best ways to prevent online ordering fraud and the chargebacks that go with it. If you need a merchant account that will automate much of the work, just contact us. Our Chargeback Defense system is just what you need.