Processing Level III data: It’s not a Mystery

Level III data is a great tool for minimizing Purchase Card fraud and misuse. Since Purchase Cards are generally used by government, or corporations for B2B payments, losses due to scammers using stolen card information are pretty rare. Normally, Purchase Card misuse is due to legitimate card holders purchasing unauthorized items for personal use.

Since Purchase Cards can support level III data, information such as item description can be captured and included on card statements of issuing banks. All it takes is a processor that can transmit level III data and a card issuing bank that can accommodate the fields of data transmitted.

But to the casual person trying to understand how all this actually happens, the “how” can be a mystery. Search the web for information about level III data and you most likely will find a lot about the data elements that are considered level III data, but precious little about how the data gets from the seller’s billing system to the card holder’s statement.

Fortunately, the Open Acquisition System (OAS) can be paired with a processor that enables the addition of level III data to the transaction information carried through the card processing network.

OAS transmission of level III works like this:

  • Basic card data is transmitted by API through a gateway to the processor. The processor coordinates the activities required of the seller with the card processing network and the merchant bank that collects funds from the issuing bank. Level III data may or may not be transmitted at this point.
  • The issuing bank does a check of that basic data, i.e., the name and other data that identifies the card as associated to the registered owner, and verifies if the card has not been reported as stolen or lost. With this verification the issuing bank authorizes funds to be set aside for the amount indicated.
  • With this authorization completed the seller fills the order and ships. OAS and processor will then complete and capture the transaction, which means an order is sent to collect funds from the issuing bank and “settle” the transaction by deducting processing fees and transmitting the net to the seller’s merchant account for forwarding to the seller’s standard bank account.
  • Level III data can be added to the transaction at any time prior to settlement. This may be done via system integration or manually through card processing software such as ICVERIFY. The number of fields that can be transmitted is generally limited only by what the seller wants to include in reports. Each field is selected for transmission with the settlement order.
  • OAS can provide more dynamic accountability solutions than simple level III data transmission. For example, each buyer/card user who makes buys through OAS can run a list of purchases, by payment type (e.g., credit card, including by card number) that includes a link to the complete order detail for each purchase. This order detail includes approvals, pricing reasonableness, and copies of any authorizing document forms.

For more information about OAS and level III processing benefits, please contact:

Thomas Graham

(760) 594-1003