A Practical Guide to Visa Commercial Enhanced Data Program (CEDP)
A Little History
In 2020, Visa introduced a new naming convention for transactions that are not eligible for one of the segment-based interchange rates. (i.e., restaurant or healthcare). Product 1 replaced Card Not Present, and Product 2 replaced Card Present. They are now introducing Product 3. This will replace the existing commercial Level 2 and Level 3 interchange programs. Product 3 will fall under the guidelines of the Visa Commercial Enhanced Data Program (CEDP).
CEDP Defined
It is a program that will define how merchants and payment processors can reduce interchange costs by adhering to Visa’s new data standards. Visa will now require merchants to be validated for the integrity and accuracy of their data passed when a commercial card is being used (B2B transactions) to benefit from the savings. Generally speaking, the metrics Visa is looking for are sales tax information (Level 2) and product information (Level 3).
Commercial Cards
Commercial cards are issued to businesses and used to make purchases on behalf of the company. Visa commercial cards include Corporate, Purchasing, and Business Cards. Only commercial credit cards, not debit cards, will be affected by the CEDP.
· Visa Business Cards: Typically, small business owners and sole proprietors. The cards are used for a wide range of everyday business expenses, such as client dinners, travel, software subscriptions, and general purchases.
· Visa Corporate Cards: Larger, more established companies with multiple employees who need to make business-related purchases. Primarily designed for managing employee-related expenses like travel and entertainment. They can simplify expense reporting and reduce the need for employees to use personal funds and seek reimbursement.
· Visa Purchasing Cards: Medium to large corporations with a significant volume of procurement or purchasing activities. Specifically designed to streamline the procurement process for goods and services.
Key Dates
· April 12, 2025: A new Visa Network Fee was introduced that applies to all transactions that qualify for Visa's Level 2 or 3 interchange programs.
· October 18, 2025: Existing Level 3 program will be replaced with Product 3 interchange rates governed by CEDP.
· April 18, 2026: The Level 2 program will be retired.
Important Changes
· Merchants’ Level 2 and 3 data accuracy, as of October 18th, will need to be verified by Visa to qualify for the lower Product 3 interchange rate. Level 3 data must be verified as accurate for 500 transactions or 20 days (whichever comes sooner). Visa will apply adjustments for Product 3 qualified transactions processed during the validation period once the merchant ID is verified.
· Visa Level 2 Interchange will go away in April 2026; merchants who previously benefited from Level 2 data will now need to pass Level 3 as well to see any fee reduction, otherwise their rates will increase to the current Card Present and Card Not Present Commercial rates.
· Previously, only Corporate and Purchasing cards could get the Level 3 interchange rates; now, Business cards can get Level 3 rates that have additional cost savings over Level 2.
· Card Present transactions did not have the opportunity to get reduced interchange rates from Level 3 data; now they can also see reduced interchange rates from passing Level 3 data.
· One thing not changing is Mastercard Level 2 and 3 interchange rates; as of now, they will stay the same. However, enhancing your data can also ensure your company qualifies for Mastercard’s Level 2 and 3 interchange rates.
Summary
Most businesses encounter commercial card transactions, even if they are not traditional B2B companies. There are cost-saving measures for these transactions. If you need help navigating this change, please get in touch with RPY.
