Interchange Fees

CPS Card Not Present Debit – Visa Interchange

by Ben Dwyer

When a business accepts a Visa debit card online or by keying in card details, it will pay one of the Visa “card not present” debit rates.

Contrary to popular belief, debit cards do not incur flat fees. You’ll be charged a percentage of the total and a per-transaction fee, just like with credit cards. However, card-not-present (CNP) debit has more possible interchange categories.

There are technically ten interchange categories for Visa CNP debit, but five of them are simply the “regulated debit” version of the other five.

What is regulated debit?

In 2010, the Durbin Amendment to the Dodd-Frank Wall Street Reform Act was passed. Among other things, the Amendment capped debit interchange fees for “regulated” debit cards. It defines “regulated” cards as debit cards issued by any bank with $10 billion or more in assets. (E.g. Bank of America, SunTrust, Wells Fargo, etc.)

That meant that any time a business accepts a regulated debit card, the most that business could be charged at the interchange level is 0.05% + 22 cents.

An Important Note

The key with the Durbin Amendment cap on debit cards (and some say its flaw) is that the cap applies only to interchange rates, which are just one portion of the total costs a business pays. Credit card processors are still free to add markups to the interchange cap.

Visa CNP Debit Rates

As noted earlier, there are ten Visa card not present debit interchange categories; five for non-regulated cards and five corresponding regulated card categories. The rates are as follows:

Volume Rate Per-Transaction Fee
CPS Card Not Present Debit 1.65% $0.15
CPS CNP Debit Reg 0.05% $0.22
CPS Retail 2 Card Not Present Debit* 0.65% $0.15
CPS Retail 2 CNP Debit Reg 0.05% $0.22
CPS E-Commerce Basic Debit 1.65% $0.15
CPS E-Commerce Basic Debit Reg 0.05% $0.22
CPS E-commerce Preferred Retail Debit 1.60% $0.15
CPS E-commerce Preferred Debit Reg 0.05% $0.22
CPS Retail Key Entered Debit 1.65% $0.15
CPS Key Entered Debit Reg 0.05% $0.22

*CPS Retail 2 Card Not Present Debit has a $2.00 cap.

This information comes directly from Visa’s published interchange schedule. Rates are subject to change at Visa’s discretion. Read more about interchange fees.

The category for which a debit transaction qualifies depends on meeting specific category criteria.

Card Not Present Debit Criteria

Some of the criteria for Visa’s card not present debit categories is the same across all of those categories. Individual categories may then also have additional requirements. First, the general criteria. To qualify for any of the categories noted above, the transaction must be:

A Visa Debit Card

Makes sense, right? Visa debit interchange categories only apply to payments made with a Visa debit card. Credit and prepaid cards have separate interchange categories, requirements, and associated rates.

Not Authorized with a PIN

Many debit cards give consumers the choice of authorizing the transaction by entering the PIN or by signing for it. When a customer signs for a debit card purchase, it’s sometimes referred to as “running as credit.” That’s a bit of a misleading phrase, though. A debit card is always a debit card, even when “run as credit.” It simply means that the transaction runs on the credit card’s network (in this case, Visa’s network) rather than the PIN debit network.

If your debit card-using customer enters their PIN at the time of the transaction, that transaction will not receive these interchange rates. Instead, it will be charged PIN debit fees set by the debit networks.

These interchange categories only refer to non-PIN debit transactions, also called “offline” debit.

Card Not Present

The transaction will take place either online or by keying in the card details. These interchange rates don’t apply to swiped (magstripe), tapped (contactless / NFC), or dipped (chip) transactions. For those, you’ll pay Visa card present debit interchange rates.

Authorized and Settled for the Same Amount

When you authorize the transaction, it will be for a specific amount. For these interchange categories, the amount you settle the transaction for must match the amount that was authorized. You’ll also need to include the authorization response data with the settlement.

Authorization and settlement amounts are typically the same in retail and other card-not-present situations. Differences primarily affect restaurants and other “tipped” industries, which also usually accept more transactions in a “card-present” manner.

Individual Category Criteria

In addition to the requirements listed above, categories can have individual requirements.

For simplicity’s sake, we’ll include the equivalent regulated debit category under the non-regulated category, as the only difference is the issuer. That is, the only difference in criteria between an unregulated debit category and the corresponding regulated debit category is whether the card was issued by a large bank (with $10 billion or more in assets) or a smaller bank (with under $10 billion in assets.) All other criteria for the two categories remains the same.

CPS Card Not Present Debit

Also known as CARD NP D

To qualify for this interchange category, unregulated debit cards must meet the general CNP debit criteria listed above, and:

  • Include Address Verification Service (AVS) code with authorization
  • Include and order number and customer service phone number with authorization
  • Have a purchase date equal to the shipping date
  • Have a purchase / shipping date within 7 days of the original authorization date
  • Be settled within 1 day of shipping date

The regulated debit category that corresponds to this interchange category is CPS CNP Debit Reg, also called CPS CNP D R. That category will apply when you meet the criteria noted but the card used is a regulated debit card.

CPS Retail 2 Card Not Present Debit

Also known as RTL2 CNP D

Only certain types of businesses are eligible for Retail 2 interchange rates. These “emerging market” business types receive special categories.

Eligible businesses include courts, government services, schools, insurance services, cable /satellite TV, fuel dealers, childcare services, telecom, real estate, and some charities. Specific eligible merchant category codes include:

  • 4814
  • 4899
  • 5960
  • 5983
  • 6300
  • 6513
  • 8211
  • 8220
  • 8299
  • 8351
  • 8398
  • 9211
  • 9222
  • 9399

If you’re not classed with one of these MCCs, you won’t be eligible for Retail 2 debit interchange, even if your business falls under one of the business types listed above. If you believe your MCC is wrong, you’ll need to work with your processor.

Aside from business type restrictions, Visa Retail 2 debit also requires that the transaction meets criteria for one of the card-not-present CPS programs. The transaction must meet CPS Card Not Present, CPS E-commerce Basic, or CPS E-Commerce Preferred interchange criteria. Use of Address Verification is optional.

Lastly, this category requires that you settle transactions within 1 day of authorization.

The regulated debit equivalent of this category is Retail 2 CNP Debit Reg, also known as RTL2CNPD R. If you meet the criteria outline for Retail 2 CNP Debit, but accept a regulated debit card, it will fall under the Debit regulated version of Retail 2 CNP Debit.

CPS E-commerce Basic Debit

Also known as ECOM BC D

Unregulated debit cards will qualify for this interchange category when they meet the general criteria specified earlier in this article, and the following additional criteria:

  • Use AVS and include it in authorization
  • Include order number and customer service number in authorization
  • Have a purchase date that matches the shipping date
  • Settle the transaction within 7 days of the purchase date
  • Have an Ecommerce Indicator (ECI) of 7, meaning that Verified by Visa 3D Secure authentication was not attempted or was unsuccessful. (This can occur when the card is not 3D Secure-enabled or the bank that issued the card does not process it as a 3D Secure transaction.)

If you accept a regulated debit card and meet the criteria outlined, the transaction will qualify for CPS E-commerce Basic Debit Reg, also known as ECOMBC D R.

CPS E-commerce Preferred Debit

Also known as ECOM PF D

The E-Commerce Preferred Debit category is similar to the E-Commerce Basic category, except for the Ecommerce Indicator requirement for 3D Secure status. For Ecommerce Preferred Debit, the Ecommerce Indicator must be 5 or 6.

A “5” indicates that the business attempted a 3D Secure card authentication and it was successful. It indicates that both the card and the card-issuing bank are 3D enabled and the cardholder authenticated the transaction.

A “6” indicates that the business attempted to perform a 3D Secure transaction, but the cardholder or card-issuing bank is not properly enrolled in 3D secure. Even though this doesn’t result in a successful 3D Secure transaction, the business qualified for E-Commerce Preferred because they attempted to authenticate it as 3D Secure and a different party was the reason it didn’t succeed.

The regulated debit category that lines up with this one is CPS E-Comm Preferred Debit Reg. You may see it referred to as ECOMPF D R. If you accept a debit card that meets the criteria for Ecommerce Preferred Debit but the card was issued by a bank with more than $10 billion in assets (that is, a regulated debit card) it will qualify as Ecommerce Preferred Debit Reg instead.

CPS Retail Key Entered Debit

Also known as KEYED D

When you hand key debit card numbers into a machine or virtual terminal, it will qualify for this category if it meets the main criteria outlined earlier, and the additional criteria below.

  • Use Address Verification and return exact match
  • Include order number and customer service phone number with authorization
  • Have same purchase date and shipping date
  • Have purchase / ship date within 7 days of authorization
  • Settle transaction within 1 day of purchase / ship date

For regulated debit cards that meet these criteria, the transaction will qualify for Key Entered Debit Reg, sometimes referred to on statements as KEYED D R.

Can debit cards downgrade?

Yes, debit cards can downgrade just like credit cards. In processing, a “downgrade” occurs when a transaction doesn’t meet the criteria for the target interchange category for which it should qualify. When that happens, the transaction will be charged according to a more expensive interchange category.

A few downgrades on a statement is normal. It’s not realistic to expect to completely eliminate downgrades. However, excessive downgrades means there’s a flaw in your transaction process that results in higher costs. Investigate any excessive downgrades so that you don’t pay more than you have to for processing.

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