Commentary by TSG’s Meghan Callahan, Interchange & Pricing Analyst
Over the past year, Visa has rolled out a new Commercial Enhanced Data (CEDP) framework for commercial and business card acceptance. The program introduced stricter data requirements, verified merchant status, and a revised set of interchange categories and incentive rates.
More recently, Visa issued an update to the program that materially impacts a significant volume of small business transactions.
Effective January 24, 2026, Level II interchange rates increased by 75 basis points, while Small Business Product 3 rates increased by 65 basis points.
The increase to Level II rates eliminates the pricing incentive for submitting additional data and creates parity with Business Product 1 rates. Although Visa had previously indicated that transactions would remain eligible for Level II rates until April 2026, this change removes any economic benefit to continued participation, effectively accelerating the market’s transition away from Level II and rendering the program functionally obsolete.
From TSG’s market observations, a growing number of processors had already begun pivoting away from Level II in anticipation of these changes, further limiting the program’s practical relevance.
While the increase to Level II rates aligns with Visa’s stated intent to transition the market to CEDP, the simultaneous increase to Small Business rates further complicates an already opaque program. As discussed in CEDP Unpacked: Complexity Without Clarity, many providers are still working through how CEDP functions in practice, from adjudication and funding timing to downstream reporting and residuals.
Against that backdrop, Small Business Product 3 rates increased by 65 basis points overnight, materially changing the economics for merchants that had already invested in meeting CEDP requirements without addressing any of the operational or structural questions the program has raised. As rates increase, the economic incentive for enhanced data submission narrows. Where absolute transaction volume is limited, incremental basis point savings may be insufficient to justify additional operational effort.
For PSPs and acquirers, this update further complicates pricing strategy, merchant communication, and downstream economics at a time when many are still adapting to CEDP’s structural changes.
The timing is also notable. Introducing higher Small Business CEDP rates amid ongoing regulatory scrutiny of interchange practices raises questions about how durable this pricing shift will be, and whether additional clarification or adjustment may follow.
In the meantime, PSPs and acquirers should reassess their CEDP strategy and communication plans. TSG is actively working with providers to evaluate the impact of these changes and determine how best to navigate CEDP as the program continues to evolve. Contact us to discuss strategic opportunities.