If you are a business that accept commercial credit cards, there are ways to lower the high cost of interchange for accepting corporate and government credit cards. You need to understand what is happening with Visa’s Commercial Enhanced Data Program, or CEDP. A lot of salespeople are still talking about Level 2 and Level 3 processing to lower rates the way they did several years ago, a process where processors automatically filled in extra fields to qualify merchants for the lower risk and lower interchange rate.
But CEDP has changed the game. It requires the merchant to manually enter the extra data to qualify the transaction at a lower risk and lower rate. It is more work for the merchant but the old system does not work anymore at savings merchants money.
Visa is no longer simply looking to see whether a merchant is sending Level 2 or Level 3 data via filled in boxes. Visa is looking at whether that data is real, accurate, consistent and usable, and not generated by a computer bot, before it lowers the risk and rate on the transaction. And the important thing to understand is that verification happens at multiple levels. It isn’t simply a box that says, “Yes, this merchant sends Level 3 data.”
So, what is Visa actually looking for?
It Starts With the Transaction
The first step is transaction-level data validation. Every commercial Visa transaction submitted for CEDP is automatically evaluated to make sure the required enhanced data fields are present, properly populated and formatted correctly.
That means you can’t simply put something into a field to make it look like enhanced data. Visa is looking for real information. A field can’t be missing, filled with zeros, placeholders or meaningless information. Visa is also checking that the information is in the correct format, including numbers, currency, text and units of measure.
For example, if a merchant consistently submits an item price of $0.01, uses a quantity of one on every transaction regardless of the actual purchase, repeatedly calls every item “Misc” or “Item,” or always reports identical freight and tax amounts, those patterns can raise red flags.
This is important for merchants because simply having a system that says it “supports Level 3” doesn’t necessarily mean the merchant is going to receive the benefit of CEDP pricing.
Step 2: Visa Wants the Data to Look Like a Real Invoice
The next step is what I would call the “Does this actually make sense?” test.
Visa looks at whether the enhanced data resembles a real commercial invoice. The line items should add up logically to the subtotal, tax and total. Pricing should make sense. Units of measure should be consistent. Tax, freight, discounts and individual line items should be properly separated.
Think about it this way. If you handed an invoice to a human being and they looked at it and said, “This doesn’t make any sense,” you shouldn’t expect Visa’s automated system to accept it either.
This is where some of the old approaches to Level 3 data can run into trouble. CEDP is looking for actual invoice-quality information, not simply data that has been populated so a transaction appears to qualify.
Step 3: Visa Is Looking at Patterns Over Time
Here’s another big difference.
Visa isn’t necessarily looking at just one transaction. The data sheet explains that Visa applies automated pattern analysis across transactions over time. It looks for repeated patterns, unrealistic consistency, the same SKUs, prices and quantities appearing across unrelated transactions, and merchants submitting essentially identical enhanced data regardless of the size of the transaction.
This is where machine learning becomes part of the process.
A merchant might pass initially, but that doesn’t mean they are permanently qualified. If the quality of the data changes or the patterns become questionable, the merchant can fail verification later.
That means CEDP isn’t a “set it and forget it” program.
Your Merchant Has a Verification Status
Visa assigns merchants an internal CEDP verification status that is continuously evaluated.
In practical terms, merchants can be verified, provisionally qualified or non-verified. A verified merchant is consistently submitting high-quality enhanced data. A provisionally qualified merchant has the data present but is still being evaluated, while a non-verified merchant is failing the quality standards and not getting the best interchange rates.
If you’re a business owner accepting a significant amount of commercial card volume, and you’d like to learn more about CEDP and saving thousands of dollars on interchange processing costs, contact Electronic Money Company for a consultation at 505-362-0837.
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