Big businesses, some of which provide credit cards to thousands of employees to make corporate purchases, like to have data about where and on what their employees are spending money.  Even though such businesses typically do not carry a balance on their credit cards (they can borrow much more cheaply from banks or the bond market), they conduct so many transactions that Visa, Mastercard and American Express compete fiercly for their business. Making these customers even sweeter, interchange rates for business cards are much higher than for consumer cards.  For example, a retail transaction using a Visa business card would qualify for the Commercial – Retail interchange category and cost 2.20% + $0.10 while a retail transaction using a non-rewards Visa consumer credit card would qualify for the CPS/Retail (Credit) interchange category and cost 1.54% + 0.10.

In order to provide the detailed information that the business customers want about employees’ spending habits, the card issuers need to rely on merchants to report the data.  In order to encourage merchants to collect and report the more detailed information, Visa and Mastercard offer a slight discount from the already high commercial interchange rates for transactions when the extra data is reported. They classify such transactions based upon how much extra data is reported into three groups: Level I Data, Level II Data and Level III Data.