CFOs, Controllers, and Operations Managers for online merchants tend to view their monthly merchant statement as a routine expense. If that’s you, you’ve probably noticed that predictable cost on your Visa statement has recently spiked. Don’t worry, it has nothing to do with your sales volume. The issue isn’t your sales; it’s your data quality.
Visa has begun enforcing its Commercial Enhanced Data Program (CEDP), replacing old safety nets with an AI-driven validation system. Merchants who continue to submit "junk" data are seeing their transactions downgraded, resulting in fee increases of roughly 40% to 50%.
So let’s make sure that you understand CEDP, make sure you know why your "Verified" status is at risk, and give you a tactical checklist to stop this revenue leak immediately.
What is the Visa Commercial Enhanced Data Program (CEDP)?
The Commercial Enhanced Data Program is Visa’s new framework for handling Enhanced Data (formerly known as Level 2 and Level 3 data). CEDP is designed to encourage merchants to submit "invoice-quality" data for transactions made with Commercial, Small Business, Corporate, and Purchasing cards. The program officially launched in April 2025, but the enforcement using AI validation began in October 2025.
The shift is from mere participation to full verification. Under the new CEDP system, Visa has introduced a classification system for merchants based on the quality of their data. This is the most simple part of this whole program. You’ll either be verified, or not.
Verified Merchants
These merchants consistently submit data that passes Visa’s integrity standards. They are eligible for immediate "Product 3" interchange rates, which is the new name for Level 3 discounts.
Non-Verified Merchants
These merchants submit data that is incomplete, inaccurate, or inconsistent. They are subject to retroactive fee clawbacks, delayed incentives, or complete disqualification from the lower rates.
It’s all built on real-time validation. Visa now uses machine learning to audit transaction submissions instantaneously. If the system detects "junk data," like random characters in a product description or a flat tax rate that does not align with the line items, the transaction will be flagged. And you don’t want that.
You pay the fee even if you fail
Visa is charging a 0.05% participation fee on all applicable commercial transactions that include enhanced data. This fee applies regardless of whether your data passes validation. If you submit bad data, you will pay the participation fee plus the higher standard interchange rate. Essentially, you’re paying a premium to be penalized.
The significance: Securing a 40% cost advantage
It’s easy to dismiss interchange as background noise, a few cents here and there that are not worth worrying about. But when you’re processing payments at scale, those cents compound fast and quietly erode your margins.
The cost of a downgrade
When a transaction fails CEDP validation, it downgrades from the preferred "Product 3" rate to a standard or non-qualified rate. The price difference is staggering.
- With Validated Data (Product 3) The cost for a single $500 commercial transaction is approximately $9.60.
- With Junk Data (Standard/Downgrade) The cost jumps to approximately $14.85.
That is an increase of more than 50% on a single transaction. If you’re processing millions in annual volume, this spread creates a massive variance in profitability.
The savings opportunity
On the other hand, the upside of compliance is significant, and not to be ignored. Verified merchants can qualify for rate reductions of up to 15 basis points (0.15%) compared to previous standards. Let’s say you’re a wholesale distributor processing $1 million a month. You make that move from "Non-Verified" to "Verified" status and you can start saving $60,000 to $90,000 annually.
The new "Product 3" rates offer substantial relief.
For example, Corporate Non-Travel Product 3 and Commercial Fuel Product 3 rates have dropped to $1.75 + $0.10, which is down from $1.90 + $0.10.
Large Ticket items have dropped to $1.30 + $35.00. This creates a competitive divide where merchants who automate their data quality will enjoy wider margins.
Why your system might be failing the "junk data" trap
You might believe your system sends enough data to qualify, but "sending data" is no longer synonymous with "qualifying.” Visa’s new AI models are specifically hunting for junk data, so you’ll need to know exactly what junk data is, and what you can do about it.
What is junk data?
Junk data refers to placeholder information that you might be using to bypass field requirements without providing actual invoice details. Common examples that now trigger immediate downgrades include:
Generic Descriptions
Visa's AI explicitly flags descriptions that are generic or effectively provide no detail. Using terms like "miscellaneous," "item," or "goods" instead of specific product names is a problem.
Repeated Characters
Filling a field with "XXXX" or "0000" just to ensure it is not blank will lead to a downgrade.
Flat Tax Rates
Submitting a summary tax amount that does not match the specific tax logic required for the jurisdiction is a failure.
The "math test"
The most common technical failure point is simple arithmetic. Visa’s validation engine checks the math on every invoice. To pass, your transaction must adhere to this formula:
Line Item Total equals (Unit Cost times Quantity) minus Discount Amount
If your system sends a Unit Cost of $10.00, a Quantity of 5, but a Line Item Total of $49.99 (perhaps due to a post-tax calculation or a rounding error), the transaction fails the math test. Under the old rules, you might have been able to get this one to slide by, but under CEDP, that’s an automatic failure.
Methods for identifying the problem: The gateway audit
You don’t need to wait for a letter from Visa to find out if your business is currently bleeding revenue due to CEDP enforcement. The evidence is already in your data. Here’s how to look for the evidence.
1. The statement check
Pull your merchant statements for October and November 2025. You’re looking for specific terminology changes. Here’s a few you should be looking for:
- Look for "Product 3"
This is the new label for transactions receiving the best rates. If you see this, you are passing validation. - Look for "Standard" or "Non-Qual" If you see a spike in commercial transactions landing in these buckets, your data is being rejected.
- Check for Level 2 Penetration
If you see a sudden drop in Level 2 qualification rates after October 17, it means your legacy data formats are no longer passing the new validation thresholds.
2. Internal collaboration: Finance and IT
CEDP compliance often falls into a gap between departments. Finance sees the fees, but IT manages the data mapping. Order some lunch and get these teams together to review specific error codes. Your payment gateway may be returning specific error codes provided by Visa. A code like CS-0004 indicates "Local Tax Included is not one of the following," and CS-0017 indicates "Unit of Measure is not one of the following".
These are technical fixes that yield immediate financial results and all it cost you was the price of a few pizzas.
Structuring your solution: Anatomy of invoice-quality data
To regain "Verified" status, you’re going to have to move from "data submission" to "invoice-quality data.” This means your payment gateway is going to have to act less like a pipe and more like a filter.
Essential data fields
Visa requires specific, descriptive data. Ensure your system is mapping the following fields dynamically from your ERP:
Unit of Measure
You’ll need to use standard ISO codes (e.g., "EACH," "BOX," "LTR") rather than internal shorthand or blanks.
Commodity Codes
These are going to have to be valid Visa-recognized product codes, not internal SKUs.
Tax Specificity
You will have to identify Local Tax Amount versus National Tax Amount. If you provide a Local Tax Amount, you must set the "Local Tax Included" indicator to "1.” If you do not, you must set it to "2.” A mismatch here, known as Error CS-0005, is a guaranteed fail.
The power of pre-validation
The most effective tactical change you can make is utilizing a payment gateway that offers real-time pre-validation.
Legacy gateways send the transaction to Visa and hope for the best. CEDP-ready gateways validate the data before it leaves your system.
They check that the math matches, the format is correct, and there are no blank mandatory fields. If the gateway detects an error, it can flag the transaction for review or auto-correct formatting issues before the transaction settles. Now you’ve made sure that you lock in the rate at the moment of purchase, rather than finding out you were downgraded 45 days later.
The VISA CEDP timeline
If you are thinking you can wait to address this, consider the timeline Visa has laid out.
October 17, 2025 (Passed) Strict enforcement began. AI validation is live. If you are not verified, you are likely already paying 40% more than necessary on cards.
April 17, 2026 (The Sunset) Visa will retire the legacy Level 2 interchange programs with minor exceptions for fleet fuel. By April 2026, you either have invoice-quality data, or you pay standard retail rates on commercial transactions. There is no longer a middle ground.
Tactical summary: How to fix it now
To stop the bleeding and secure your "Verified" status, follow this immediate action plan:
Stop the junk
Instruct your IT team to disable any logic that auto-fills fields with generic terms like "miscellaneous" or "goods". Visa’s AI is trained to flag these specific patterns.
Verify the math
Run a test transaction. Manually calculate Unit Cost times Quantity. Does it match the Line Item Total sent to the gateway exactly? If there is a penny variance, your system requires calibration.
Train your team
Your Accounts Receivable staff must understand that "PO Number" and "Invoice Number" are no longer optional administrative fields. They are financial levers. Entering them correctly saves the company 0.50% to 1.00% on that invoice.
Audit your gateway
Ask your provider if they support CEDP Pre-Validation. If they do not, or if they do not know what that is, you are likely using a legacy connection that is costing you money.
Clean data, lower fees: why “verified” now matters more than ever
The era of "junk data" in payments is over. While the new CEDP standards are fairly rigorous, they also offer a path to lower fees for merchants willing to adapt. The math is pretty simple here: verified data leads to verified savings.
There’s no need to let technical oversights eat your margins. And if you need a hand finding out which gateways are going to help you make sure that the data you’re passing to Visa is correct, just reach out to your Account Manager and they’ll get you squared away.
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