Understanding Government Purchasing Cards and Level-3 processing
On the surface, a Purchase Cards look like your average consumer or business card, but they posses more business or more features, controls and capabilities. A typical Purchase Card can be setup to control:Total monthly spend
- Number of monthly transactions
- Number of daily transactions
- Daily spend
- Monthly spend
- Amounts per transaction
- Where the card may be used with MCC restrictions
These extra control features help buying organizations manage their purchasing policies and processes.
The most differentiating characteristics of Purchase Cards is that their transactions can be processed with the same level of information generally found on an itemized invoice.
This is called “Level-3 line item detail. Level-3 information contains information about the items purchased such as Item Part Number, Description, Quantity, Unit of Measure, Price and more.
Level-3 data must come from the merchant and be transmitted with the payment transaction.
When this happens and if the merchant is set up properly Level 3 processing provides very significant cost savings. 30%-40% Less than you would generally pay for these types of transactions.
This is further increased for larger ticket transactions which saves can be as high as 70%.
What is level 1, 2 and 3 data
Data regarding transactions made on a purchase card is passed by the merchant to its bank through Visa’s network. The amount of data associated with the transaction determines the level. Level 1 is generally retail merchants.
Level 1 Data: Standard commercial transaction information, including total purchase amount, date of purchase, merchant name, etc.
Merchants have financial incentives to pass more data with each transaction. Government agencies can utilize level 2 and 3 data for data mining, analytical, sourcing, and other capabilities.
Level 2 Data: Sends Level 3 information and adds merchant category code, , accounting code,sales tax amount merchant TIN, 1099 status and merchant zip code,minority/women owned business codes and other data elements.
Level 3 Data: This can include summary data or full line-item transaction detail. In addition to the data in level 2, level 3 will provide fields for quantities, unit cost, product codes, descriptions, zip code, duty amount, freight, order date, order # and other transaction information.
If you have questions regarding level 3 processing or would like a complimentary level 3 analysis give us a call at 888 790 3450 or email [email protected]