Visa CPS, or Custom Payment Service, refers to a program outlining specific criteria that your credit card transactions must meet to qualify for the lowest possible interchange rates. Essentially, it's Visa's way of incentivizing merchants to process transactions in a manner that reduces risk and cost for everyone involved. Think of it as Visa's "best practices" program for payment processing.
Here's a more detailed breakdown:
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Interchange Rates: These are fees charged by card-issuing banks to merchants for processing credit card transactions. They are a significant expense for businesses. Lower interchange rates mean lower costs for the merchant.
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Meeting CPS Criteria: The criteria for CPS qualification vary depending on the type of transaction (e.g., card-present, card-not-present) and the merchant's industry. These criteria typically involve:
- Data Security: Ensuring proper data encryption and security measures are in place to protect cardholder information.
- Transaction Processing Procedures: Following specific procedures for authorizing and settling transactions, such as timely submission of transaction data.
- Card Verification: Using address verification systems (AVS) and card verification value (CVV) checks to authenticate the cardholder.
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Benefits of CPS Qualification: When transactions meet CPS requirements, the merchant benefits from:
- Lower Interchange Fees: This is the primary benefit, leading to reduced processing costs.
- Improved Transaction Security: Adhering to CPS guidelines helps minimize fraud and chargebacks.
- Streamlined Processing: Following standardized procedures can improve the efficiency of payment processing.
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Consequences of Not Meeting CPS Criteria: If a transaction doesn't meet CPS requirements, the merchant may be charged a higher interchange rate, increasing processing costs.
In short, CPS is about optimizing how a credit card transaction is handled to reduce risk and lower costs for both the merchant and Visa. For a business owner, understanding and adhering to CPS guidelines can significantly impact their bottom line.
