The Green Sheet Online Edition
July 14, 2025 • 25:07:01
Visa tightens rules for commercial data incentives
Both Visa and Mastercard have incentive interchange to encourage acquirers to provide additional details with their transactions. This enhanced data, referred to as Level 2 or Level 3 data, was introduced back in the 1990s to allow the card networks to better serve the B2B or commercial market and compete with American Express.
All transactions contain Level 1 data. Level 2 requirements are less onerous and Level 3 the most comprehensive. A table of the data Levels is provided in a sidebar to this article. Visa is overhauling its Commercial Enhanced Data Program (CEDP) by inserting a non-interchange pass-through fee (NIPTF) for participation and making it more difficult to qualify for Level 2 and Level 3 interchange rates. In April 2025, Visa launched a phased rollout of its new version of the CEDP, which introduces significant changes to Level 2 and Level 3 programs.
The goal is to improve the quality of data shared between merchants and issuers and eliminate filler data.
In the past, acquirers and merchants accepting corporate and purchasing cards have benefitted from reduced interchange rates by providing Level 2 and Level 3 data, even if the data was not accurate or validated. This non-financial information was then shared with cardholders, ostensibly to assist with reconciliation, tax compliance, purchasing controls and supplier management.
Acquirers and merchants providing these data elements could save over 1 percent on the transaction without any increase in costs—until now.
As part of the first phase that became effective in April 2025, Visa introduced a new NIPTF, a 0.05 percent fee on all transactions that include enhanced Level 2 and 3 data. At the same time, Visa started sending reports to acquirers whose merchant transactional data contained Level 2 and 3 information that will fail future validation. The goal is to help them prepare to meet more stringent standards that will be introduced in later phases of the rollout. Because acquirers frequently supply "filler data," as opposed to precise facts and figures aligned with the data fields, adhering to historical practice may result in a high failures rate under the new standards.
In the second phase, effective October 2025, Visa will implement a new CEDP interchange schedule but is strictly enforcing the submitted data through its newly introduced data integrity process. Non-compliant fields will be flagged. If the submitted data fails, Visa will provide the acquirers with the associated error codes and the merchant will not earn the reduced interchange rate.
Visa’s newly implemented monitoring will employ machine learning technology to identify invalid fields. Previously, Visa was not scrutinizing and validating data. As was widely known, much of the Level 2 and Level 3 data was merely filler data and was neither accurate nor validated.
Going forward, tax exempt transactions, for example, must be designated as such, and merchants cannot simply insert a tax rate based on the buyer’s (or seller’s) ZIP code. Merchants may not use generic line-item descriptions, such as the merchant descriptor. Fields must not be left blank or filled with a single character. Part of Visa’s new algorithm involves a process of categorizing merchants as verified or non-verified, which impacts their ability to participate in Level 3 interchange programs. Verified merchants will receive reduced interchange rates immediately.
However, Visa is introducing a lagged interchange process flow whereby non-verified merchants can be credited back for interchange rate reductions within 10 to 15 days. These post-settlement adjustments could pose an operational challenge for merchant billing as well as financial reconciliation and residuals. In the final phase of Visa’s CEDP rollout, Commercial and Small Business Level 2 Interchange programs are eliminated for all non-fleet fuel categories. This is an enormous impact as Level 2 required far less data as indicated in the table above, and many merchants do not have the availability or specificity to provide Level 3 data. Level 3 will exist with expanded interchange programs, and be subject to the verified/non-verified merchant validation.
So, who wins? Issuers might. They will see a reduction in Level 2 and Level 3 transactions and thus an increase in interchange. Depending on the value of the rewards provided to cardholders, this could result in additional margins. Visa wins (who do you think is writing the rules anyway?). The card company will get 5 basis points on all Level 2 and Level 3 transactions.
To minimize impact, get the reports on your merchants. Understand the messaging, and work with your merchants to ensure compliance with these enhanced requirements and make sure your residuals account for the post-settlement adjustments. 
As founder of Humboldt Merchant Services, co-founder of Eureka Payments, and a former executive for such payments innovators as WePay, a division of JPMorgan Chase, Ken Musante has experience in all aspects of successful ISO building. He currently provides consulting services and expert witness testimony as founder of Napa Payments and Consulting, www.napapaymentsandconsulting.com. Contact him at kenm@napapaymentsandconsulting.com, 707-601-7656 or www.linkedin.com/in/ken-musante-us. As CFO and co-founder of Secure Bancard, Elaina Smith specializes in helping ISOs, ISVs and agents gain control over their merchant services portfolios, maximize revenue, and scale their operations with confidence. Connect with her on LinkedIn at www.LinkedIn.com/in/elainademezasmith/
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