CPS Restaurant is a Visa Interchange Rate. Very similar to CPS Retail, except the sale was accepted at a restaurant rather than a retail store. Also, CPS Restaurant allows for a variance between the authorization amount and the settlement amount of up to 20% to account for tips.
Interchange fee: 1.54% + $0.10
- Cardholder and card present, signature obtained, single electronic authorization, read and transmit complete magnetic stripe
- Transaction settled within 1 day of authorization, authorization response data included in settled transaction.
- Sic code is 5812 (Restaurant) or 5814 (Fast Food Restaurant).
Why is allowing a variance between the authorization amount and the settlement amount of up to 20% important?
In general, Visa is a big fan of having the authorization amount exactly match the settlement amount. For most businesses, when it doesn't match the transaction can downgrade to a higher interchange rate or be more susceptible to being reversed via chargeback. It's along the lines of, "Hey, when you ran my card at first you said it would be $20.00 (authorization), but when it was all said and done, you ended up charging me more, $25.00 (settlement). What's up with that?". Restaurants get a pass on this to account for tipping (authorization is $20.00, add $5.00 for the tip, settlement is $25.00).
What happens if the tip amount is over 20%?
The transaction will still be completed, but it can downgrade to a higher interchange rate. It's not much though, so tip away and feel free to go over 20%, they deserve it.