The Future of Level 2/3 Interchange and Upcoming Network Changes
The payments landscape is in the middle of a major transformation. Visa, Mastercard, and other networks have begun rolling out new programs and fee structures that change how businesses qualify for interchange savings, respond to disputes, and even authenticate transactions. For finance leaders, operators, and controllers, these changes are already reshaping daily operations.
Visa Retires Level 2/3 — Enter CEDP
For decades, many businesses relied on Level 2 and Level 3 interchange to lower costs on commercial card transactions. By submitting enhanced data like tax amounts, PO numbers, or line-item details, merchants could qualify for reduced interchange rates, especially in B2B and government settings.
That system is now phasing out.
April 2025: Visa introduced the Commercial Enhanced Data Program (CEDP). This new framework combines Level 2, Level 3, and Large Ticket programs under a single model.
CEDP incentives: Merchants can earn up to 15 basis points in savings if they send valid enhanced data. At the same time, Visa added a 0.05% participation fee to each eligible transaction.
October 2025 milestone: Visa will use machine learning to classify merchants as verified or unverified based on data quality. Only verified merchants will continue to receive enhanced interchange benefits.
April 2026: Visa will sunset most Level 2 programs entirely.
The message is clear: sending enhanced data is no longer enough. Only accurate, validated submissions will qualify.Businesses that have been “checking the box” without monitoring data quality will see savings disappear.
Visa Dispute Fees and System Updates
As of April 2025, Visa also introduced a tiered dispute fee model. Faster, cleaner responses to chargebacks now cost less, while delays or incomplete evidence drive fees higher.
Visa has also continued modernizing its infrastructure, expanding token services, authentication tools, QR-based payment support, and preparing rails for future digital currency acceptance.
Mastercard: Higher B2B Costs
Mastercard has already increased the cost of certain commercial transactions in the U.S.:
Commercial B2B VIP 9 rate jumped in April 2025 from 1.20% + $60 to 2.95% + $0.10 per transaction.
The Credential Continuity Fee tripled from $0.03 to $0.09.
A new 0.25% undefined authorization fee took effect in July 2025.
Mastercard is also piloting biometric EMV metal cards with fingerprint authentication, adding another layer of physical security for card-present transactions.
The Bigger Picture: Fees, Lawsuits, and Regulation
Beyond Visa and Mastercard’s internal changes, the broader ecosystem is shifting:
Merchant litigation continues: The proposed Visa and Mastercard “swipe fee” settlement that would have reduced interchange by 4–7 basis points was rejected in 2024. Legal battles are ongoing, leaving uncertainty for U.S. merchants.
Regulatory pressure abroad: The EU and UK are pushing for stricter transparency, standardized disclosures, and even caps on interchange in some sectors.
Global alternatives: India’s Unified Payments Interface (UPI) continues to expand internationally, offering a real-time payments alternative that challenges the networks’ dominance in certain markets.
What Businesses Should Do Now
These changes are already live and will continue through 2026. The impact is direct — on cost, compliance, and operational efficiency.
Audit your enhanced data: Make sure line items are real, totals match, and tax mapping is correct. Accuracy matters more than ever under CEDP.
Confirm readiness with your processor: Ask if they are submitting enhanced data correctly and if they can provide verification reports.
Strengthen dispute workflows: The new fee model rewards speed and quality, not late or weak responses.
Reassess your B2B card mix: Large commercial transactions on Mastercard now carry a much higher cost. Budget for it and consider alternative acceptance strategies.
Stay informed: With regulatory and legal shifts in play, proactive monitoring is the only way to avoid costly surprises.
Closing Thought
The retirement of Level 2/3 is not just a technical update — it marks a broader shift by the networks toward rewarding accuracy and compliance while layering in new fees. Businesses that prepare now will be positioned to protect margin and avoid disruption.
At PlutosPay, we help companies adapt to these changes by cleaning up backend processes, validating data quality, and uncovering the hidden costs that networks and processors often don’t explain. If your business relies on commercial or large-ticket transactions, now is the time to prepare.