Accepting Payments Online: Level 1, Level 2 and Level 3 Processing

Individuals that sell online personally or as a small business might use a marketplace site like eBay or Etsy. These sites allow items to be listed with images and other basic features. These sites also allow sellers to accept payments online via a service like PayPal. While accepting payments this way works for individuals or very small businesses, larger organizations will need a more powerful, secure solution for payment processing.

Being able to accept a payment online from a web store is a crucial piece of the puzzle when it comes to eCommerce. Consumers want to be able to proceed through checkout with ease and be able to make purchases with their preferred type of payment, which may be a Visa, MasterCard, Discover or Amex credit card or an electronic transfer from their bank account, also called an ACH or eCheck transaction. On top of payment types, there are some other features a business may need as well, depending on who makes purchases from their web store.

For starters, there are three different categories that credit card transactions can be classified as. These different categories, Level 1, Level 2 and Level 3, are distinguished based on the amount of data required for verification and authorization. An example of a credit card transaction classified as Level 1 processing is a consumer who makes a purchase, large or small, from a business-to-consumer (B2C) website. The only data needed for a transaction like that is the merchant’s name, i.e. Best Buy, the amount of the transaction and the date.

Transactions classified as Level 2 processing require more data. This type of payment is more common for business-to-business (B2B) web stores. In addition to the data needed for Level 1 processing, a Level 2 transaction also requires the customer code, merchant minority code, merchant postal code, merchant state code, tax amount and tax identification.

Level 3 processing requires the most amount of data. These types of transactions come from B2B websites or businesses that sell to government agencies. Individuals from that type of business may make purchases using a government or corporate purchasing card. These types of transactions require a significant amount of data to provide the organization making the purchase with more control over purchasing. In addition to the data needed for Level 2 processing, Level 3 processing requires data like item descriptions, product codes and quantities along with a ship from postal code, freight amount, destination country code and more. A solution with the ability to handle these different levels of payment processing will save a business money in the long run by reducing fees associated with the higher level data.

Some other things to look for in a payment processing solution include:

• CVV2 support
• AVS support
• PA-DSS Certification
• Integration to your back-office accounting software, like Microsoft Dynamics

Microsoft Dynamics users can benefit from implementing our solution for accepting payments online. Credit Card Extension (CCE) from k-eCommerce integrates with Microsoft Dynamics GP and allows a business to pre-authorize, post-authorize, sale, void and credit all within the ERP. All above mentioned features are also part of CCE. For more information, visit our website.

About k-eCommerce

As a Microsoft Gold Certified Partner, k-eCommerce is a recognized leader in providing eCommerce and ePayment solutions for Microsoft Dynamics AX, GP, NAV and CRM. With offices in Plymouth, Mich. and Montreal, k-eCommerce develops and delivers fully integrated eCommerce websites, payment processing and online bill pay solutions to businesses of all sizes and types around the world. k-eCommerce serves the Microsoft Dynamics partner channel by providing sales and implementation assistance as well as support.

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