Visa’s 2025 Rule Shock for Utilities: CEDP, Service Fees, and Card Costs

Visa’s 2025–2026 rule changes create a hidden cost squeeze for utilities that rely on card payments—especially where commercial volume is growing and Level 2 data is disappearing. Utilities that align CEDP compliance and service fee strategy can turn a looming cost increase into a budget‑positive move instead of a surprise hit to operating margins.

Quick Answer: What changes for utilities in 2025?

Visa’s 2025 updates introduce a critical divergence between consumer and commercial payment costs.

• The CEDP Mandate (Oct 2025): The Commercial Enhanced Data Program replaces legacy Level 2/3 incentives. Merchants must now provide Product 3 (Level 3) data—including line-item details and ship-to info—or face automatic downgrades to base rates.

• Financial Impact: Utilities failing to pass enhanced data will see interchange costs rise by 1.0%–1.5% on commercial volume.

• Service Fee Expansion: As of October 18, 2025, MCC 4900 utilities can now implement service fees on consumer card payments to offset these rising operational costs.

• The Verdict: To avoid a budget-positive move turning into an operating margin hit, utilities must integrate billing systems with gateways capable of automated Level 3 data pass-through.

What did Visa change for utilities in 2025?

Since the October 2025 enforcement began, Visa has implemented AI-based monitoring to ensure data integrity across its networks. A key part of this shift is the expansion of service fee eligibility to include utilities under MCC 4900, allowing providers of electric, gas, water, and sanitary services to offset costs through registered processors. Simultaneously, Visa launched the Commercial Enhanced Data Program (CEDP), which mandates stricter data quality requirements in exchange for lower commercial interchange rates.

These moves sit on top of the existing Visa Utility Interchange Program, which historically offered a flat per‑transaction rate (often around 0.75 per card‑present or card‑not‑present payment) with strict restrictions on cardholder fees and channel parity. The net effect is that utilities now face a strategic choice between staying in the traditional utility program, moving to service fees, or running a hybrid model while managing new CEDP rules on their commercial card flows.

What is CEDP and why does it matter to utilities?

Visa’s Commercial Enhanced Data Program replaces legacy Level 2 and Level 3 “incentive” structures with a new Product 3 commercial interchange framework tied to accurate, detailed transaction data. Under CEDP, Visa uses AI‑based monitoring to detect “junk data” (placeholders such as zero tax or generic product codes), automatically downgrading mis-qualified commercial transactions to more expensive base rates.

For utilities, this matters because commercial and business card payments are growing faster than consumer volume in many portfolios—property managers paying for multiple units, fleet or operations cards, municipal cross‑charges, and large corporate accounts. Those transactions no longer benefit from Level 2 shortcuts; they either qualify at strict Level 3‑style standards (Product 3 with enhanced data) or fall back to base interchange that can exceed 3% all‑in.

How do Level 1, Level 2, and Level 3 (Product 3) compare now?

From a utility finance leader’s perspective, the key differences are data requirements and effective rate. The high‑level comparison looks like this (illustrative ranges based on current industry commentary, not a binding schedule):

Where does commercial card risk hide in utility portfolios?

Most utility reporting still labels everything “credit cards” or “card payments” without breaking out commercial vs consumer volume, creating a blind spot exactly where CEDP rules bite hardest. Commercial usage typically shows up in:

• Property management and landlord payments for multiple units on one account

• Corporate accounts with multiple service locations or meters

• Municipal or inter‑agency cross‑charges paid by card

• Fleet fueling and operations spending at vertically integrated utilities

• Contractors paying permit, connection, or impact fees by purchasing card

Consumer utility payments that qualify for Visa’s utility program flat fee tend to be insulated from CEDP changes, but commercial cards follow B2B rules, including CEDP’s enhanced‑data requirements. If you do not explicitly know your commercial share and qualification rates, you cannot quantify the risk from downgrades as Level 2 disappears.

How big can CEDP downgrades be for a utility?

Industry analyses suggest that losing Level 2 incentives and missing CEDP qualification can add roughly 1.0%–1.5% to the effective interchange rate for impacted commercial transactions. For a utility processing about 500,000 in monthly commercial card volume, that translates into an additional 60,000–90,000 per year in interchange costs once downgrades fully take hold.

The risk is higher for utilities with a large proportion of business or purchasing cards and no enhanced data integrations between billing, CIS, and gateway systems. The good news is that, with proper integration and testing, many utilities can qualify a large share of commercial volume at CEDP Product 3 rates and reverse much of the downgrade impact.

How do these policies interact in practice?

The full effect only becomes clear when CEDP enforcement, Level 2 sunsetting, and service fee expansion are viewed together. Conceptually:

• CEDP raises the bar on commercial data quality, with downgrades pushing some transactions toward 3%+ if not properly qualified

• Level 2’s removal eliminates a “middle tier” that many B2B and utility merchants had relied on for moderate savings

• Service fee expansion gives utilities an option to recover consumer card costs, but does not automatically solve commercial interchange inflation

In a typical cooperative or municipal utility with a few million dollars in monthly card volume, this can look like: stable consumer utility‑rate economics, rising commercial costs from CEDP downgrades, and a new service fee lever that can more than offset the net increase if implemented thoughtfully. The sequence and program choices determine whether the utility ends up in a net‑cost or net‑recovery position.

How should utilities respond in the next 90 days?

A practical response plan fits into a 90‑day window and focuses on visibility, analysis, and clear decisions.

Days 1–30: Visibility – what data do you actually have?

1. Request a card‑type breakdown from your processor (consumer vs business/commercial/purchasing cards) for the last 6–12 months.

2. Obtain Level 2/Level 3/CEDP qualification reports for commercial volume, if available, or ask what reporting can be turned on.

3. Compare pre‑October and post‑October 2025 statements to see whether any commercial categories have moved up in effective rate.

4. Confirm your MCC, any enrollment in the utility interchange program, and whether you are registered or eligible for the service fee program.

Days 31–60: Analysis – how much is at stake?
5. Estimate CEDP exposure using a simple formula: commercial volume × estimated qualification gap × 1.0%–1.5% potential increase.
6. Model service fee revenue potential on consumer volume, accounting for adoption, channel mix, and likely card mix.
7. Review billing and CIS capabilities to see whether they can support invoice, line‑item, and ship‑to data on card transactions.
8. Ask your gateway/processor what specific integrations are needed to pass CEDP‑compliant data end‑to‑end.

Days 61–90: Decisions – what is your program strategy?
9. Decide whether to prioritize CEDP compliance, service fee implementation, or a parallel path, based on your commercial share and political appetite for fees.
10. If pursuing service fees, begin Visa/Mastercard registration and any required board, commission, or council briefings.
11. If pursuing CEDP compliance, scope integration work with your billing vendor and gateway, including test plans prior to full rollout.
12. Establish a recurring review of card‑type mix and interchange qualification so you see CEDP and fee‑program impacts over time.

How can utilities quickly check their CEDP exposure? (Checklist)

Use this quick checklist as a starting point:

• Do you receive regular reports breaking down consumer vs commercial card volume?

• Can you see which commercial transactions qualified for Level 3/Product 3 vs downgraded to base?

• Does your billing or CIS system store invoice‑level detail that can be mapped to card transactions?

• Has your processor explained how CEDP affects your specific MCC 4900 utility set‑up?

• Have you validated that any historical “Level 2 optimization” practices are still allowed under CEDP’s data‑quality rules?

If you answer “no” to most of these, you likely have CEDP exposure and limited visibility into how much it may cost as Level 2 is retired.

Can utilities combine CEDP compliance and service fees strategically?

Yes. Utilities are not limited to a single lever; the most resilient strategies recognize that commercial and consumer economics are now diverging. Common patterns include:

• Keeping consumer payments in a simplified utility interchange or service fee structure focused on affordability and predictable costs

• Investing in CEDP‑ready data for commercial and business cards to win back 1.0%–1.5% of potential interchange drag

• Steering high‑value, low‑risk transactions to ACH or other lower‑cost methods where appropriate and allowed by policy

Utilities that treat Visa’s 2025 changes as a forcing function for a broader payment strategy review can emerge with lower net costs, better reporting, and fewer surprises in budget season.

When should a utility ask for outside help?

Utility finance and accounting teams should consider outside help when:

• Internal teams cannot access card‑type and qualification data from current processors

• Billing and CIS vendors are unfamiliar with CEDP or Level 3 requirements

• There is internal pressure to implement service fees quickly without fully understanding utility program trade‑offs

• The utility wants transaction‑level modeling of CEDP exposure, service fee revenue, and alternative payment steering options

Specialized processors and consultants that understand both utility billing and card‑brand rules can help diagnose CEDP risk, design fee programs, and validate that any changes remain compliant with Visa, Mastercard, and applicable state or local requirements.

FAQs

Q1. When did Visa expand its service fee program to utilities?
Visa expanded service fee program eligibility to include utilities under MCC 4900 effective October 18, 2025, allowing eligible electric, gas, water, and sanitary utilities to charge service fees if they register through participating acquirers.

Q2. Does Visa’s CEDP apply to all utility card payments?
CEDP applies to commercial, corporate, business, and purchasing card transactions at utilities, but not to consumer utility payments that qualify for Visa’s flat utility interchange structure. Consumer transactions are generally insulated, while commercial transactions must meet enhanced data standards to qualify for reduced Product 3 interchange.

Q3. What happens if my utility does nothing about CEDP?
If you do nothing, commercial card payments that previously qualified for Level 2 may be downgraded to base commercial rates as Level 2 sunsets, which can raise effective interchange by roughly 1.0%–1.5% on that portion of volume. Over a year, that can mean tens of thousands of dollars in added cost for utilities with significant commercial card usage.

Q4. How can my utility quickly estimate CEDP exposure?
Start by asking your processor for a 6–12 month breakdown of consumer vs commercial volume and any Level 2/Level 3 or Product 3 qualification reports. Then approximate exposure as commercial volume multiplied by the share not qualifying at enhanced levels, multiplied by an estimated 1.0%–1.5% rate gap.

Q5. Can utilities charge service fees and still participate in Visa’s utility interchange program?
Visa’s traditional utility interchange program with flat per‑transaction pricing typically prohibits cardholder fees and requires acceptance parity across channels. The expanded service fee program creates a separate path for MCC 4900 utilities, but the economics and rules differ, so utilities should evaluate whether the utility program, service fees, or a hybrid configuration delivers the best overall result.

Q6. What systems usually need changes to support CEDP?
Most utilities need coordinated updates across billing/CIS, payment gateways, and processors to capture and transmit invoice‑level, line‑item, and ship‑to data required for CEDP Product 3 qualification. End‑to‑end testing is critical, because missing or “junk” fields will trigger AI‑driven downgrades even if the billing system holds the right information.

Q7. How do service fees interact with ACH and other alternatives?
Even with service fees or CEDP in place, utilities can still promote ACH or other lower‑cost methods where allowed by policy, steering appropriate customers to cheaper rails while using service fees and CEDP to manage card costs. The best strategies align fee programs, channel design, and messaging so customers understand their options and the utility’s cost structure.

Disclaimer

This article is for general informational and educational purposes only and does not constitute legal, tax, accounting, or regulatory advice. Visa and Mastercard rules, network fees, and state or local requirements change frequently and may apply differently based on your utility’s location, MCC, and program enrollment. Before implementing or modifying any service fee, convenience fee, surcharging, or other card‑fee strategy, consult with qualified legal counsel and your payment processor to confirm compliance with all applicable laws, regulations, and card‑brand rules.