Dynamic Interchange Takes Card Pricing Beyond Static Tables

For decades, interchange rates have resembled a laminated chart: fixed categories, annual updates. That model is shifting.

Dynamic interchange is arriving, where fees are no longer governed only by preset categories and periodic updates but instead reflect what happens inside each individual transaction.

Interchange has traditionally been determined through fixed schedules. Merchants landed in predefined buckets, issuers collected standardized rates.

Visa’s Commercial Enhanced Data Program (CEDP) offers the clearest example of the shift. The program replaces traditional Level 2 and Level 3 qualification with real-time data validation, directly linking interchange to the accuracy of invoice-level information submitted with each transaction, spanning everything from detailed product level data to tax information to freight costs.

PYMNTS reported that the move would have a strong impact on commercial transactions. In an interview with PYMNTS CEO Karen Webster, Dean M. Leavitt, founder and CEO of Boost Payment Solutions, said “This is all about validating the data and making sure that it’s accurate and real so that the supplier can enjoy the lower interchange rate.”

And in demonstration of the economics tied to CEDP, Leavitt late last year noted that suppliers that fail verification can pay roughly a full percentage point more in interchange. For verified transactions, Leavitt said Visa applies a 15-basis-point reduction versus legacy Level 3 rates, offset by a small network assessment, producing a net 10-basis-point decrease. New rates on some commercial card transactions were put in place by the payment network this month, small business transactions that submit Level 2 data without verified CEDP compliance face significant increases of up to 75 basis points.

Checkout Data Becomes Cost Lever

As pricing becomes sensitive to verification and data completeness, operational consequences ripple across the ecosystem.

Acquirers and processors now need fee engines that can adjust continuously rather than rely on static rate tables. Pricing must reflect channel, authorization certainty, fraud telemetry and data integrity. Sales and risk teams increasingly share responsibility, because checkout behavior now directly influences economics. Interchange revenue is becoming more dependent on real-time assessments of fraud exposure and approval quality. Risk models that lag Visa’s rule changes would have a relatively negative impact on margins.

Merchants and platforms sit closest to the data and therefore hold the most influence over outcomes. In another example PYMNTS detailed tied to dynamic interchange, global issuer processor Thredd introduced a real-time payments offering for its travel agency customers through the Mastercard Wholesale Program. The program includes dynamic interchange as a feature.

Checkout fields, invoice integrity and gateway configurations have become financial controls. In many cases, legacy optimizations that once reduced costs now trigger higher rates under updated rules. Clean data, in other words, now carries monetary weight.