In 2024, Visa announced a dramatic shift to how companies process commercial credit cards. Affected were qualifying programs known as Level 2 and Level 3, programs used by B2B merchants to lower the cost of acceptance by providing enhanced data with every transaction.
IQCS specializes in managing credit card processing costs for B2B companies for over 14 years. Following is an explanation of how CEDP will impact your bottom line.
Understanding CEDP
In our opinion, this program is about managing the fees banks receive (known as interchange) when a commercial credit card is processed. For over a decade, Level 2 & 3 has given B2B merchants the opportunity to cut costs by providing data about the products and services they sell.
Historically, this was accomplished through expensive software systems capable of passing the required data. After web-based processing took hold, the first Level-3 capable gateways with the ability to automate this through default data (aka “dummy data”) allowed SMB merchants to access the lower Level-3 rates with ease.
Eventually, there were dozens of gateways promising auto-Level-3. The problem was that many provided invalid or useless data. In effect, cheating the system. Without the ability to gatekeep so many merchants, Visa needed a solution.
Now, with advent of artificial intelligence, Visa can effectively distinguish who is – and is not – passing valid data. CEDP is about qualifying and rewarding those who properly provide accurate and specific data to qualify for Level 3
Timeline
Nov 2024
Program announced.
Nov 2024
Apr 2025
New 5bps fee introduced for all qualifying Level 2/Level 3 transactions.
Apr 2025
Oct 2025
New lower rates for all Visa Level 3 capable credit cards goes into effect.
Oct 2025
Jan 2026
Visa raises rates for Level 2 to match CNP and raises new L3 rates by 65bps.
Jan 2026
Apr 2026
Level 2 program to be sunset.
Apr 2026
Level 3 Lowers Your Costs
By providing Level-3 Data, you can lower your Overall Effective Rate when you accept commercial credit cards.
When you sell to other businesses, you have a HIGHER occurrence of commercial credit cards. Large companies buy via Purchasing cards; SMB uses Small Business credit cards.
With CEDP, Level 3 is the only way to manage the cost of acceptance.
Interchange Rate Guide
CEDP has changed the game, leaving Level-3 as the only option to cut costs.
VISA's CEDP Program
Accurate and Specific Data….
The purpose of CEDP is to verify who is passing valid data…information about the services and products purchased with their cards. This not a requirement, but a trade. In exchange for this data, Visa (and MasterCard) provide access to lower interchange rates.
For over a decade, advanced gateways included the capability to auto-populate this data to access lower rates with “dummy” data. The CEDP program seeks to end this practice.
…About Products You Sell
Visa wants information about what you sell, how much of it you sold, and the location of where it shipped to.
IQCS has the gateways that make this easy.
Customer AVS and card data stored securely & PCI compliant
Pre-load product line items
Select from drop down list, prioritized for ease
VISA's CEDP Program
Cost Savings for Extra Data
Visa understands that this data will take extra work, and they are generously compensating merchants who comply. The CEDP program is making several changes:
Lowering existing Level 3 rates.
NEW Level 3 rates for all Small Business Credit
Eliminating Level 2 (effective April 2026)
Multi-Level Qualification
There is more than one way to qualify for Level 3. While providing your own data reaps the most benefits, IQCS provides a dual solution:
Gateway Qualification
Network-end Qualification
If you miss a transaction on the front end, we ensure that every transaction qualifies on the back end.
Understanding Visa’s CEDP Program
Verified vs. Non-Verified
For merchants to qualify for Level 3 rates, they must first be Verified by Visa. This a status placed on your merchant account by your processor but can only be changed at Visa’s discretion.
Many merchants who recently switched will likely fall into Non-Verified status until Visa can qualify your new method of processing and the data being passed. Merchant’s who have been flagged as Non-Verified will pay rates equal to Card-Not-Present.
Failure to provide data will increase costs.
To become Verified, a merchant must continue to pass valid Level 3 data. Once Verified, all previous qualifying transactions will have the Interchange differences refunded to them. IQCS will ensure that happens.
IQCS Has The Solutions
IQCS has been solving Level 3 processing for over 14 years. Our unique approach allows us to access every processing platform, Virtual Terminal, and Gateway solution, to find the one that best suits your style of doing business.
