CPS is one of those terms you may hear thrown around the business world a lot, especially if you are in retail, so it is important to understand what it is. CPS, also commonly referred to as the Visa CPS program, stands for Customer Payment Service. CPS provides retail businesses with a certain set of rules or “qualifications” to follow when making a transaction and sets the charges based on those rules. You do not have to follow these rules, but you will likely end up paying more in charges and interchange rates if you do not.
Who Qualifies for CPS Exchange Rates?
The most basic kind of CPS is in-person, card-present interactions. With this kind of retail, you will end up with the lowest rates. To meet these rates, you have to meet five general criteria requirements. If you do not meet all of the qualifications, you may be downgraded and have to pay slightly more, but you can still qualify for CPS. While it is normal to get a few downgrades, you may want to try to make some changes to how you are completing transactions if you get too many.
The five general requirements are:
1) The Card Has To Be Present
In order to qualify for the lowest CPS rates, you have to be completing card-present transactions. A card-present transaction is anytime the card is swiped, inserted, tapped, etc., into the machine. It is not considered card-present if the customer hands you the card to key into the system. It has to be read by a machine. Further, the entire magnetic strip/all the card number has to be read.
2) Basic Consumer Cards
The purchase needs to be made with a basic consumer card. Basically, this means that it cannot be a commercial or purchasing card, nor can it be earning rewards. CPS retail does not apply to any of the cards with special deals like “3% cashback” or cards that give you airline miles for making purchases.
3) Settled Within One Day
The transaction has to be settled within one day of the transaction date. If it is not, it will not qualify for CPS rates. Most credit card machines automatically batch all of the days’ transactions at the end of the day, making this an easy qualification to meet. However, if you have to batch your transactions manually, you need to make sure you settle them within one day.
4) Settled for the Same Amount Authorized
Most of the time, the amount of the settled transaction has to match the amount authorized. There are a few exceptions to this rule, all of which generally revolve around businesses that accept tipping. Businesses that may qualify for an exception are bars/taverns, beauty salons, spas, amusement parks, etc.
5) Accepted at an Eligible Retail Businesses
Almost all retailers are eligible for CPS, but there are some non-retail businesses that may not be eligible such as restaurants, hotels, travel services, etc. If your business is not eligible, there are likely other programs that you can use to get lower exchange rates.
Other CPS Programs
The above qualification is for the main type of CPS: retail, card-present, and in-person exchange. However, if you are not a card-present business or if you are an eCommerce business, there are still CPS programs available to you. You will just have to meet a few different or additional qualifications.
A card-not-present transaction is any kind of transaction where the card is not inserted, swiped, taped, etc., by a machine. If it is a card-not-present transaction, you must meet the following qualifications:
1) Every transaction/settlement can only have one authorization.
2) The final settlement has to be within 15 percent of the original authorization amount. This 15 percent can only include charges for things such as shipping or sales tax.
3) The transaction has to be settled up to 7 days prior to the shipment of the merchandise.
4) The settlement can contain no more than one reversal, which is only permitted to update the authorization amount to equal the final settlement amount.
5) The authorization has to settle within 2-days.
6) The transaction is processed through a point-of-sale (POS) or terminal. The POS has to provide both the order number and a way to reach the merchant’s customer service. This could be a telephone number, website URL, or email address.
7) There must be some form of address verification at the time of the transaction.
If you are an internet or eCommerce business, you must meet the following requirements to qualify for CPS rates:
1) Each transaction can only have one authorization per one settlement.
2) Some form of address verification must be included at the time of the transaction.
3) The authorization must include a purchase date, the purchase date must be equal to the shipping date, and the shipping date must be within 7 days of the authorization.
4) You must settle the transaction on the day it occurred or within one day of the purchase date.
5) The authorized and the settled amount must be the same.
6) The transaction needs to include both an order number and a customer service phone number.
7) When you are setting up the online gateway, you need to ensure that the MOTO/ECI indicator is set to a value of 7.
Why Use CPS?
CPS does seem complicated at first look, so you may be wondering why you should use it. It is true that CPS requires you to consider a lot of different things that you may not want to consider when completing a transaction; however, we do still recommend that you use CPS. The point of the CPS requirements is to protect both merchants and consumers when they make/receive Visa purchases. Furthermore, they have incentivized these protections by lowering charges and interchange rates when merchants meet these requirements. By learning the qualifications for your business, you will be able to save money, and both you and your consumers will be better protected.