About Purchase Cards

Purchase cards are used in the procurement process to eliminate paper-based order systems and associated costs. This improves control and accountability through itemized statements, to foster better risk controls through spending limits and buying from approved vendors. This reduces administrative overheads because employees are empowered to make small purchases. It also enables enterprises to negotiate better contract pricing and discounts with suppliers through the use of vendor detail reports.

To promote acceptance and usage of Purchase Card programs, card issuers have established incentive rates for merchants. These rates are available for merchants who comply with either Level 2 or Level 3. Transactions that comply at Level 1 qualify as a normal credit card transaction.

Program Levels

The term Level does not apply to the card, but to the transaction data submitted for that card. Generally, a higher level means more detailed data for reporting.

The following transaction levels are recognized:

Level 1

Function as normal credit cards and is authorized and associated with normal transaction data in authorization and settlement. Any merchant who accepts credit cards support this level.

Level 2

Additional data regarding sales tax, customer code, purchase order number, invoice number is captured at the point of sale. In most cases, this information is combined with the merchant's Tax ID number, state, and postal code data and is then passed through during settlement. For some processors and banks, however, a Level 2 authorization may include some of this data.

Level 3

Significant additional information such as line items, product codes, item description, unit price, unit quantities, and ship-to postal data are added to the Level 2 data to provide optimal reporting to buyers and sellers. Settlement transactions typically carry Level 3 data.

Level 2 and Level 3 data is generally considered non-financial data. Lack of adequate data may cause a transaction to be downgraded.

PayPal generally requires up to Level 2 information in an Authorization transaction followed by additional Level 3 data in the associated Delayed Capture transaction. A Sale transaction should include all Level 3 data since it is authorized and later settled.