Level 2 Processing
Level 2 processing is an enhanced method of processing business-to-business (B2B) and business-to-government (B2G) payment card transactions that requires additional data in the transaction information. This additional data includes, but is not limited to, the following:
- merchant name and tax ID
- product code
- product description
- sales tax
Level 2 processing is usually used by corporate and purchasing cards, helping businesses track their expenses more efficiently and qualify for lower interchange rates.
Providing this additional data not only helps in detailed reporting and expense management for the businesses but also reduces the risk of fraud and chargebacks. This is because the additional data helps in verifying the authenticity of the transaction.
As a result, card networks often offer lower interchange rates for Level 2 transactions as they carry a lower risk compared to standard transactions.