A new Visa transaction integrity fee will be charged starting April 14, 2018, on any credit transaction that does not meet the custom payment service (CPS) qualification standards. Visa, MasterCard, Discover and Amex update their Interchange guidelines biannually in April and October. This fee will be $0.10 per transaction.
So, what are the CPS qualification standards, and how can you expect this fee to impact your monthly merchant statements?
Visa Transaction Integrity Fee on Non-CPS Transactions
As part of Visa’s Interchange guide, the CPS program allows certain low-risk transactions to qualify for a lower processing rate. To qualify, the business must ensure that the transaction has been properly secured and authorized to minimize the risk of fraud. Both card-present and card-not-present transactions have their own rules and criteria to qualify for CPS pricing. If the criteria are met, these transactions will qualify for a lower rate; otherwise, they’ll downgrade to a higher, costlier rate.
CPS pricing impacts the Interchange, or wholesale cost, of running a transaction. The Interchange goes up with risk or reward, so incentivizing businesses to mitigate risk and passing on the cost savings is a win-win for Visa and the businesses that accept its cards. That said, this new $0.10 fee increases the penalty for not adhering to CPS guidelines, and puts additional pressure on businesses to mitigate risk.
Guidelines to Achieve CPS Pricing
Below are the current retail and card-not-present criteria for Visa’s CPS program. These rules are subject to change.
- The customer and the card are both physically present.
- The card is swiped and a signature is obtained.
- Card authorization is settled and batched out within 24 hours.
- The settled amount and authorized amount match (unless the business has taxi cab, bar, salon, or health and beauty spa merchant category codes).
CPS Card Not Present
- The transaction is processed by mail or over the phone where the customer or the card are not present during the transaction.
- No more than one transaction is settled per authorization.
- The transaction authorization is settled within two days of the merchandise shipment.
- The customer receives an order number and a telephone number, URL or email address where the business can be reached.
- Address Verification Service (AVS) is used. (We highly recommend using AVS in general, as the rate increase between card-not-present transactions with a successful AVS match and no AVS can reach 64 percent.)
- The transaction adheres to the Visa International Operating Regulations, which state the following:
- The settlement amount must be within 15 percent of the authorized amount. The difference accounts for the shipping and sales taxes.
- The transaction must occur within seven or fewer calendar days of the shipment.
Does your business follow the guidelines above for retail and card-not-present transactions? Is there a particular rule you didn’t know about? We’d love to hear about your experiences reducing risk in the comments section below.