Visa Data Rules Drive Interchange Costs Higher

A new assessment program from Visa has merchants facing higher costs in interchange fees.

The Visa Commercial Enhanced Data Program (CEDP) was launched in April alongside the Visa Acquirer Monitoring Program (VAMP).

CEDP is used in assessing interchange fees paid by merchants. Since its launch, some merchants have been unprepared for higher expenses in their interchange fees when their new interchange level provided by Visa led to higher costs, Payments Dive reports.

These merchants are failing to provide data requested by Visa in its new CEDP. In exchange for this data, Visa provides merchants with discounts on interchange fees for processing credit card transactions. By not providing this data and gaining discounts, merchants are hit with higher interchange costs.

In the past, merchants have often entered dummy data into transaction fields so they could receive discounted rates. But Visa will no longer turn a blind eye to the practice.

The enforcement of CEDP started in October with Visa requesting data, including invoice line items and remittance, from retailers, restaurants, and other merchants. If merchants are not able to submit these items to Visa, they’ll be hit with 0.5% to 1% higher interchange fees, according to Priority Commerce.

When it comes to interchange fees, there are three levels from Visa to consider. Level 3 requires the most data from merchants and gives the highest discount on interchange fees. Level 2 asks for less data and offers a smaller discount. Level 1 has a base interchange rate that is offered to merchants, according to Payments Dive.

To get the highest discount, merchants will want to provide Visa with the data requested in Level 3. If that is challenging for the merchant, at least try to share data required in Level 2  and receive a smaller discount. If a merchant stays in Level 1, they will be paying the highest interchange fees charged by Visa.

Here’s another reason to attain Level 3 with your data. The Level 2 interchange discount will end next April. So by next spring the only interchange discount will be available to Level 3 merchants.

In addition to CEDP, Visa has launched a new fraud mitigation and dispute management framework known as VAMP. Compliance to this program for Visa clients, partners and merchants began in October. 

It’s been a busy year for merchants as they look to comply with two new Visa programs launched in the past year, CEDP and VAMP.

The time for merchants to submit data is now. Enforcement of the new interchange rules for data began in October. Each day that merchants fail to send required data to Visa, the more they will pay in interchange fees. Merchants: Do everything you can to meet the Level 3 data requirements and receive the highest discount on interchange fees. 

Merchants also will want to comply with fraud and dispute management rules of VAMP effective in October.