Urgent Rate Alert: The January 24 “Small Business Card” Interchange Jump—And What to Do About It

By Dale Erling | 15+ Years in Payment Processing and Fintech | Last Updated January 26, 2026

Executive Summary

Effective January 24, 2026, Visa implemented a significant 75 basis point (0.75%) increase on Level 2 interchange rates for small business credit products. If you accept small business or commercial cards, your costs are about to jump unless you act fast. This is a major structural shift designed to force merchants off legacy “Level 2” systems and into Visa’s newer Commercial Enhanced Data Program (CEDP) and Product 3 framework. The bottom line: continuing to process under Level 2 will now actually cost you MORE than sending enhanced data, and significantly more than sending no data at all. We’ll walk you through exactly what’s happening, what it means for your business, and how to respond before your February statement shows the damage.

What Happened on January 24

Visa announced two major changes to how small business and corporate card transactions are priced. First, Level 2 interchange rates for small business cards are jumping 75 basis points across all tiers. That’s not a typo. Second, Visa is simultaneously raising CEDP Product 3 rates (the newer, better system) by 65 basis points. Sounds like a loss either way? It’s not, but the details matter, and that’s exactly where most merchants will get confused.

The good news: if you qualify for Product 3 (which requires submitting complete, accurate line-item data), you’ll still come out ahead of the new Level 2 rates. The bad news: if you don’t qualify for Product 3, you’re now worse off than if you submitted no enhanced data at all. Visa’s message is unmistakable: “Use our new CEDP system with accurate data, or face higher costs.”

The Real Numbers: What Changed on January 24

Let me break down exactly how this affects you. Small business cards have five tiers, and each tier’s rates have moved. Here’s what you need to know for your specific tier.

Small Business Card Tier 2 Example (Most Common)

Before January 24: Level 2 at 2.05% + $0.10 per transaction After January 24: Level 2 at 2.80% + $0.10 per transaction With CEDP Product 3 (Verified): 2.55% + $0.10 + 0.05% CEDP fee per transaction

Let’s do the math on a $1,000 small business card transaction for Tier 2:

Pre-January 24 with Level 2: $20.50 (interchange) + $1.00 (per-transaction fee) = $21.50 Post-January 24 with Level 2: $28.00 (interchange) + $1.00 = $29.00 With CEDP Product 3 Verified: $25.50 (interchange) + $1.00 + $5.00 (CEDP fee) = $31.50

Wait, that doesn’t look right. Let me recalculate with the correct CEDP fee application:

Pre-January 24 Level 2: 2.05% + $0.10 = $20.60 total Post-January 24 Level 2: 2.80% + $0.10 = $28.10 total CEDP Product 3 Verified: 2.55% + $0.10 + 0.05% = $26.60 total

On a $10,000/month volume of Tier 2 small business cards, here’s what that means:

Level 2 (pre-January 24): $206/month Level 2 (post-January 24): $281/month — that’s $75 more per month Product 3 Verified: $266/month — that’s $15 cheaper than the new Level 2

So yes, Product 3 is still your best option. But the difference is smaller than headlines might suggest, and you MUST qualify as “Verified” to get those rates. More on that in a moment.

Why Visa Made This Change: Understanding the Big Picture

Visa’s been pushing merchants toward CEDP and away from the old Level 2 system since April 2025. This January 24 move is the accelerant. By making Level 2 rates so expensive that they’re literally 5 basis points MORE expensive than sending no data at all, Visa has removed the incentive to stay on Level 2. You either go full Product 3 with accurate data, or you don’t bother trying for a discount at all.

From Visa’s perspective, this makes sense. The old Level 2 system was built in the 1990s and relied on merchants filling in a few extra fields (like sales tax and customer code). The problem? A lot of merchants were gaming the system—sending placeholder values like “$0.00 tax” or generic descriptions just to qualify for the rate. Visa’s AI now catches all of that and flags it as “junk data.” So Visa decided: if you’re not going to send REAL, complete invoice-level data, we’re not giving you a discount at all.

That’s where Product 3 comes in. Product 3 requires full line-item detail: unit price, SKU, quantity, description, shipping, commodity code, discount amounts. Basically, invoice-quality data. Merchants who submit accurate Product 3 data get classified as “Verified” and qualify for lower rates. Merchants who submit incomplete or inaccurate data get classified as “Non-Verified” and get hit with base rates.

What You Need to Do RIGHT NOW (Today, Not Later)

This is the urgent part. You have a few weeks before April 17, 2026—that’s when Visa officially sunsets Level 2 entirely. After that date, you can’t send Level 2 data anymore. You have to send Product 3 or nothing. But the immediate pain hits tomorrow when your processor’s wholesale costs jump.

Here’s your action plan:

Step 1: Audit Your Current Status (This Week)

Call your payment processor today and ask two specific questions:

1. “What is my current Data Quality Score or CEDP Verification status?”
2. “Are we classified as Verified or Non-Verified in Visa’s system?”

Your processor should have a report from Visa by now showing whether your historical Level 2 and Level 3 submissions met CEDP validation standards. You’re looking for “Verified” status. If you’re “Non-Verified,” ask what specific data errors Visa identified. That’s critical information.

You should also ask your processor to show you a detailed breakdown of your small business vs. corporate vs. purchasing card volume. This matters because the rates I’m discussing apply ONLY to small business cards. Corporate and purchasing cards have a completely different rate structure (and actually see more favorable CEDP outcomes).

Step 2: Understand Your Card Mix (This Week)

You need to know: what percentage of your business card volume is “small business” cards versus “corporate” or “purchasing” cards? Your processor can pull this from your statement. Different card types have different rates, and if you’re processing a lot of corporate or purchasing cards, the math changes significantly in your favor with CEDP.

Small business cards are the ones hitting the brakes with this January 24 change. Corporate and purchasing cards actually benefit more from Product 3, with savings up to 20 basis points versus the new Level 2 rates. So if 80% of your volume is corporate cards, you’re actually in a good position. If it’s 80% small business cards, you need to pay closer attention.

Step 3: Evaluate Your Data Submission Capabilities (This Week)

Here’s the hard part: can your current system actually submit complete Product 3 data for every transaction? Product 3 requires:

Unit price for each line item Quantity for each line item SKU or product code Item description (actual description, not placeholder text) Discount amounts Shipping and handling Tax amount Commodity codes (for some transactions) Freight charges if applicable Unit cost

If your current system is just auto-filling fields with zeros or generic text, you won’t qualify for Product 3 rates. Visa’s AI catches that automatically now. You either need to upgrade your system to capture and submit real data, or you need to implement a process where your team manually reviews transactions for accuracy before they’re submitted to Visa.

Is this a pain? Yes. Is it worth the cost of a system upgrade? Depends on your transaction volume. If you’re processing $100,000+ per month in small business cards, a $200-500/month investment in better data capture tools probably pays for itself. If you’re at $10,000/month, you might just accept the higher Level 2 rates until you grow.

Step 4: Talk to Your Processor About Solutions (This Week)

Your payment processor should have tools or recommendations for staying CEDP-compliant. Some processors offer:

Automated data validation before submission to Visa Templates that auto-populate certain fields to ensure accuracy Reporting that shows exactly which transactions are triggering “junk data” flags Integration with accounting software to pull real invoice data

Ask your processor what they offer. Don’t accept vague answers. You need specific tools that actually help you submit compliant data.

Why This Matters: The February Statement Shock

Most merchants won’t realize this has happened until they get their February 2026 processing statement. That’s when they’ll see the rate increase hit. If they’re on an “Interchange-Plus” pricing model with their processor, they’ll see the wholesale cost jump directly. If they’re on a flat rate or subscription model, the increase might be buried in “other fees” or a rate adjustment—but it’s still hitting their bottom line.

The merchants who act this week? They’ll either be positioned to qualify for Product 3 rates before February arrives, or they’ll have a documented plan in place showing their processor they’re working on compliance. That matters for negotiations.

The merchants who wait until February? They’ll have already eaten the cost increase for a month, and they’ll be scrambling to improve their data quality retroactively.

Frequently Asked Questions

Q: Why did Visa target small business cards specifically for this rate increase?

A: Small business cards are the tier where merchants have historically been the sloppiest with data quality. Larger merchants submitting corporate and purchasing card data tend to have better systems in place already. By hitting small business cards hard with this rate increase, Visa is forcing smaller merchants to either upgrade their data infrastructure or pay the penalty.

Q: I’m on a flat-rate or subscription processor. Will this affect me?

A: Yes, absolutely. Your processor pays wholesale interchange costs to Visa, and those costs just went up. Some processors might absorb part of this for competitive reasons, but most will pass it through to you as a rate increase or fee adjustment. Ask your processor directly: “Will the January 24 Visa rate increase affect my rates?” Don’t accept “maybe” as an answer.

Q: What if I just stop processing small business cards altogether?

A: That’s one option, but it’s cutting off revenue. A better approach is to understand your economics: if you’re processing $10,000/month in small business cards and the new Level 2 rate costs you an extra $75/month, can you reduce that by improving your Product 3 data quality? If the answer is yes, do that. If the answer is no (because you lack systems to capture good data), then you can make the business decision to stop accepting that card type or factor the higher costs into your pricing.

Q: Is April 17, 2026 really when Level 2 sunsets, or can I keep using it?

A: April 17, 2026 is the official sunset date. After that, Visa will no longer accept Level 2 data submissions at all. You must submit Product 3 (full line-item detail) to get any reduced rates. This doesn’t mean you can’t accept the cards—it just means you won’t qualify for any interchange discount. Transactions will be processed at base rates, which can be 3%+ all-in.

Q: Can I just submit Level 2 data through April 16 and then switch to Product 3 on April 17?

A: Technically yes, but practically it’s a bad strategy. If your system can’t submit good Product 3 data, it can’t suddenly start on April 17. You need time to test, validate, and ensure accuracy. Start now. By April, you should be comfortable submitting good Product 3 data. That gives you buffer room for data quality improvements and system fixes.

Q: What happens if I submit incomplete or inaccurate Product 3 data?

A: Visa’s system will flag you as “Non-Verified,” and you won’t qualify for Product 3 rates. You’ll be charged base rates instead. Visa also reserves the right to retroactively adjust fees if they discover your data doesn’t meet standards. So accuracy matters. Don’t guess.

Q: I’m worried about my Data Quality Score. How do I fix it?

A: Ask your processor for a detailed error report from Visa. They’ll show you exactly which fields are wrong or missing across your submissions. Common errors include: tax amounts that don’t match, descriptions that are blank or generic, quantities set to zero, line items that don’t add up correctly. Once you see the specific errors, you can either fix them manually (for high-value transactions) or implement system changes to prevent them going forward.

Q: Are there other payment networks making similar changes?

A: Mastercard has announced plans to shift toward their own data validation framework, but the January 24 rate increase is Visa-specific. Discover and American Express haven’t announced similar changes yet, but watch this space. The industry trend is unmistakable: better data quality = lower rates. Garbage data = higher costs.

The Bottom Line: You Have a Choice

This January 24 rate increase is uncomfortable, but it’s not a reason to panic. You have two options:

Option 1: Invest in your data infrastructure now so you can qualify for CEDP Product 3 rates by April 17. This costs money (system upgrades, potentially staff time) but saves you money long-term.

Option 2: Accept higher small business card processing costs and either raise your prices or reduce your acceptance of these card types.

Most merchants should choose Option 1. But that requires starting now, not in March.

The merchants who benefit most from CEDP are those who invest early. You have about 3 months to get your data quality right before Level 2 sunset. That’s enough time if you start this week.

Disclaimer

This guide is for informational purposes only and does not constitute financial or legal advice. Interchange rates, fees, and Visa’s policies can change. The specific rates mentioned in this article reflect Visa’s published rates as of January 2026 and may vary based on your merchant category code, processor, card type, and tier classification. Consult with your payment processor or a qualified payment specialist before making strategic business decisions about your payment processing setup. The timeline mentioned (April 17, 2026 Level 2 sunset) is based on current Visa announcements and subject to change. Always verify current rates and requirements directly with your processor.

Ready to audit your CEDP status? Contact IntelliPay today and ask for your Verification classification and Data Quality Score. Don’t wait for February’s statement to find out you’re paying more.