2 days ago
What Merchants Should Know About Visa's Commercial Enhanced Data Program
Robert Day is the MP at and the author of The Great American Heist: How Credit Card Processors Steal Businesses' Profits. getty
The credit card processing industry is undergoing a major change since Visa announced the Commercial Enhanced Data Program (CEDP), which went live in the U.S. in April. This new program replaces the legacy Level 3 and large ticket interchange structures with a system that rewards merchants for submitting cleaner, more accurate data. After October 17, 2025, transactions submitted with incomplete or incorrect Level 2 or Level 3 data will not qualify for Level 3 interchange rates, according to Worldpay.
If that sounds like a major shift, it is. I've worked in this space for more than 25 years, and this is the most significant shake-up I've personally ever seen. Here's what merchants should understand and how they can prepare.
CEDP is Visa's attempt to modernize and standardize enhanced transaction data for business-to-business (B2B) purchases. Historically, merchants could qualify for reduced interchange rates by submitting Level 2 or Level 3 data, but the process was often inconsistent and messy.
Now, Visa is tying cost savings directly to data accuracy. If you submit the required line-item fields and Visa Commercial Solutions (VCS) validates them, you can qualify for a lower interchange rate. The New Rates And Fees
Visa is also adding a 0.05% CEDP participation fee to every qualifying transaction, Worldpay also said. Merchants may still save money if their data passes validation, thanks to reduced interchange rates. Some CEDP rates are 7% to 10% lower than previously available. Large ticket transactions, for example, drop from 1.45% + $35 to 1.3% + $35, Worldpay reported. That sounds great if you qualify, but merchants can't simply submit what's required—it must also be validated by VCS, which could potentially influence how often merchants see the savings. Goodbye, Level 2
What seems to be one of the most overlooked aspects of this rollout is the elimination of Level 2 interchange rates. That tier provided a middle ground for merchants who couldn't—or didn't—submit full Level 3 data.
By April 2026, Level 2 will be gone, with the exception of the fleet fuel-only Level 2 program. Otherwise, only Level 3 will remain—and only for merchants who meet the new validation requirements. How This Could Affect Tax-Exempt Transactions
Here's where I believe things get messy. In my experience, tax-exempt transactions have always struggled to qualify for Level 3. Under CEDP, Visa requires tax amounts or rates be explicitly stated, even if they're zero. So, unless the data is structured correctly, tax-exempt transactions could still downgrade. And many B2B transactions are tax-exempt.
The good news? I've seen some gateways say they're working on developing solutions to ensure these transactions can still qualify. But this is where merchants need to be proactive. If your gateway can't support tax-exempt processing under CEDP, you'll need to find one that can. Because if your transactions don't qualify, your rates will likely go up. The Bigger Picture: An Industry Shake-Up
This isn't just a new rate structure; I believe it's a tectonic shift in how processors make money. Many processors have offered to 'optimize' Level 3 data by auto-populating fields for years. They'd help merchants qualify for better rates while keeping 50% to 80% of the savings for themselves. So, for example, if the merchant was charged $10 less, the processor would keep $5 to $8 and pass the rest to the merchant.
The new rules will most likely eliminate that revenue stream for the processor. But if there's one lesson I've learned in this industry, it's that they'll find new ways to recover lost revenue, so it will be interesting to watch and see what their next move will be. What Merchants Should Do Now
First, check your enterprise resource planning (ERP) or point-of-sale (POS) system. Is it sending the five required fields? More importantly, is that data accurate?
Next, talk to your gateway provider. Ask if they can handle tax-exempt transactions under the CEDP rules. You may need to switch before October to avoid getting hit with unnecessary fees if they can't.
And finally, watch your merchant statements like a hawk. Especially in the fourth quarter of this year, look for signs that:
• You're not getting the new reduced rates
• Transactions are downgrading
• CEDP participation fees are being added without benefit
Remember, it's not just about the rate anymore—it's about validation. And if your data doesn't pass, you may pay more without realizing it.
If all this feels overwhelming, you can consider bringing in a professional. Engage a credit card processing audit firm to help you monitor your statements, evaluate your systems and stay ahead of any games being played behind the scenes. Full disclosure: My firm does this, but we're not the only ones. Shop around. Make sure whoever you choose doesn't lock you into a contract and has the experience to back up their claims. LinkedIn is a great place to verify that. Final Thoughts
As I see it, Visa has made its move. The question is how the rest of the ecosystem—processors, merchants and software providers—will respond.
One thing's for sure: The rules have changed. And if you're not paying attention, you could be paying more.
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