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Let Me Use Your Merchant Account

Wednesday, January 09, 2008

Maybe you have a friend that has a small business.  And occasionally you allow him to run a credit card through your terminal or electronic payment gateway.  You see nothing wrong with this since he is your friend.  Unfortunately, chances are very great that this is against your merchant account agreement and card association rules (Rules for Visa Merchants and MasterCard Merchant Rules).  Allowing your friend to use your merchant account to accept credit cards will make you susceptible to chargebacks, specifically Reason Code 81 (Fraudulent Transaction - Card-Present Environment) or Reason Code 83 (Fraudulent Transaction - Card-Absent Environment) under Fraud Codes for Chargebacks.  The acquiring bank might also issue Reason Code 75 (Non Receipt of Information Chargebacks).

If your merchant account provider receives one of these reason codes from the issuing bank for a chargeback, your merchant account provider might suspend your processing until an investigation is complete.  Reason Code 75 usually will not be as bad as Reason Code 81 or 83, however you always want to do everything you can to prevent chargebacks.

Also, chances are very good that your merchant account provider will place you on the TMF / MATCH list.  Once on this list, it is near impossible to get another merchant account.

Excuses Not to Have a Merchant Account

A lot of times, business owners will make an excuse not to have a merchant account.  Unfortunately, these excuses might actually lead to the business going under.

Not Enough Money

Maybe your friend says he does not make enough to warrant a merchant account.  Well, a merchant account usually costs between $25.00 - $50.00 a month.  Most people have a cell phone that costs this much money per month.  And a lot of these fees are incorporated into your discount rate.  And since he does not advertise that he accepts credit cards, who knows what how much business is lost.  Always have confidence in your business so you will be able to invest money into your business.

Bad Personal Credit

Most merchant account providers understand people will run their business differently from their personal accounts.  If you are in the United States, applying for less than $30,000 a month in volume, and not selling any high risk items, your personal credit history will not have that much to do with your merchant account. 

Do not sign up for multiple merchant accounts if you think you might be turned down.  It usually takes less than 24 hours to be approved, wait for that confirmation.  Otherwise, you might end up with more than one merchant account which will cause you other problems.

Actually, your friend has a better chance of getting a merchant account than you since you are on the TMF / MATCH List.

Encourage Your Friends

They are your friends - encourage them to invest a little more money into their business.  You have seen first hand how much more business credit cards have brought to your business, share that knowledge with them.  Ask your friend to contact your ISO / agent for more information today!

Getting Your Money

Friday, July 13, 2007

When it comes to having a merchant account, getting your money is just as important.  Some people might tell you if you are in the United States and doing more than $1,000 a month, consider a merchant account along with an electronic payment gateway instead of an IPSP (Internet payment service provider) like (some versions of) Paypal and 2Checkout.

There are some reasons behind this.  Some processors change a minimum fee a month, maybe $15.00.  So if you sold $1,000 of merchandise that month and your discount rate is 2.29%, that would be $22.90.  You have met this monthly minimum requirement and should have nothing to worry about with this fee.

In Business to Make Money

Chances are you are in business to make money though.  And chances are, you will doing more than $1,000 a month.  But let's say that is what you are doing.  Is Paypal better for you?  Yes and no.  It might be cheaper for you when considering the amount of money they charge.  guess what though?  Paypal is keeping your money until you sign into their website and tell them to send it over.  Or you might be able to drive down to the bank and withdraw the money via an ATM.  Either way, it is going to take you some time. 

Faster Money with a Merchant Account

With a merchant account, your money is going to be deposited into your bank account usually in a couple of days after the batch is completed. Let's say you close your batch on Sunday (usually before a certain time as well - check with your processor).  If all the programs run correctly, you should have the money in your bank account on Tuesday. 

So you just have to ask yourself is your time worth the $25.00 or so a month you might be spending for a merchant account?  If the answer is yes, then get a merchant account.  If the answer is no, get a Paypal account.

(Keep in mind that we only discussed $1,000 a month in volume.  Chances are, anything over this amount, the scales are going to tilt more in your favor of having a merchant account.)

Merchant Account Reviews

Thursday, June 14, 2007

There are scores of websites offering reviews of merchant accounts.  Unfortunately, most of the websites will usually be one-sided, favoring one merchant account provider or an agent.  If you are in the United States, you have hundreds of merchant account providers to choose from, and thousands of agents. 

First, remember you will always hear more negative comments about any company than positive ones.  A perfect example is Paypal.  You will hear a lot of negative stories and comments regarding Paypal.  Some people will even claim Paypal is a scam.  When something does not go our way, we tend to complain about it or find others that have had similar situations.  The Internet has allowed those people to congregate on message boards, newsgroups, etc to share experiences.

You can try your best to look at different websites and get a people's opinions.  Unfortunately, that is all it is - an opinion.  The more times you use a service, your chances increase that something will go wrong.  Reviewing a product or service can be very difficult.  Sometimes the reviewer has a bias already toward the company.  Or maybe the reviewer gets other people's opinions of a certain service since there is not any way the reviewer can test that product effectively.  And usually this is the case. 

Each merchant is different.  The reviews that you will read will also just use a certain amount of those services.  And it cannot really compare to your needs.

So what does matter in these reviews?  You can consider these opinions but most people will not give positive comments for a company. What about your money?  With the larger companies (First Data, Nova, Chase-Paymentech), you know your money is safe.  You have a large corporation to back it up.  Most agents will resell for one of these companies (and we have already discussed on how to choose a United States merchant account provider).  Most should be able to give you a free rate review if you have established processing history.   This review is the important factor.  It will allow you to see if you could save money by changing merchant account providers.  And you might be able to keep the same electronic payment gateway so your website will not need to be re-programmed.

Bottom line: Don't let the merchant account review websites fool you.  They are ran by an agent or an ISO.  Even this blog is ran by the people from First Data Loud and you will see information on here from time to time that is beneficial to us.

Debit Cards on the Internet

Friday, June 08, 2007

You might have seen some discounts that are being posted 2.05% or even lower on some merchant account provider websites.  This discount rate is easy to come by if you have enough volume.  Some merchant account providers though are now offering merchants two rates - often times called a split rate.  One rate for debit card transactions and one rate for credit card transactions.

Split Rates

Split rates might help your business if you think you have a lot of customers using a debit card.  Of course, it will have to be at least half of your volume to consider making the switch. 

Blended Rates

A blended rate is what most merchants have today, whether you know it or not. Merchant account providers charge you the same for debit card and credit card transactions.

For example, let's say the debit card discount rate is 2.05% and the credit card discount rate is 2.58% . And the blended rate 2.29%.  The average transaction is $50.00 and there are 30 transactions.  With a split rate and consider that half of your transactions are with a debit card, you would be spending about $34.73.  With a blended rate, the charges would be about $34.35. 

Remember, your discount rate is based on volume, not the number of transactions.  As usual, do a little research before switching or signing up for a split rate.  With the small monthly volume listed about ($1,500.00), your charges could be about $38.70 using a split rate and all your transactions are credit cards.

Lower Discount Rates

Friday, June 01, 2007

Since April, changes have been made to the way that Visa and MasterCard charge a merchant.  You probably have seen this reflected on your merchant account statement.  You might see more mid-qualified or non-qualified transactions.  Or you might see merchant account providers offering a low discount rate. 

However, these discount rates come with a qualification.  You might need to have a minimum of $50,000 a month in volume to have a low(er) rate.  Or the advertised rate might be the keyed rate for debit cards.  And you will have another rate for credit cards.  Or you might have a higher rate for non-qualified transactions. 

Before you agree to anything, the prices should be listed on the contract that you sign.  If not, don't agree to anything. You can read more about merchant account agreements and looking for a cheaper merchant account provider.

Chargebacks Are Not Worth Fighting

Wednesday, May 16, 2007

For whatever reason, some merchants are not worrying about chargebacks.  They might only get one every few months but they are not replying to it.  I guess they feel that the card associations are going to rule against them, so why bother? Well you bother because it is your business, it is your right to fight.

For example, if someone were to walk into your store, load up a basket full of items and walk out the front door - you would stop them, right?  By not fighting a chargeback, you are allowing the customers to walk right in and take whatever they need.  OK, you might have insurance but guess what, your insurance rates will go up because your risks are going up.  Your merchant account fees will also go up or they might even suspend or terminate you because you are a higher risk.

Retrieval Requests and Chargebacks

Of course, the first is to always try to prevent a retrieval request or a chargebacks. A retrieval request could be as something as simple as I don't recognize the name of this company.  I wrote about this because this happened to me once as a consumer: Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks.  It also happened back in October.  I sent in my yearly membership fee to Sam's Club.  Over the weekend, I was checking my credit card statement online and noticed a charge for Wal-Mart.  Since I knew I had not been to Wal-Mart, I called the credit card company and told them the charge was unauthorized and to send me a new card (I thought my card had been compromised).  The next day I remembered I had used that particular card to pay for my Sam's Club membership via United States mail, but surely a company as large as this and actually wanted to get into this business would have a correct merchant identifier on the credit card statement?  It turns out I was wrong, since the charge was the same amount as Sam's Club's fees. 

Just to remind you just in case - always respond to a chargeback, no matter what.  That is unless of course, you are a merchant who opened a merchant account to process thousands of fraudulent credit card transactions in a short period of time.  Yes, those people do exists and you want to make sure that your provider does not think you are one of those types of merchants.

Some Basic Merchant Account Fees

Thursday, May 03, 2007

Merchant account fees vary per provider. The more volume you do, the better chances you have that your discount rate will be lower.  On your merchant account agreement, you will find some or all of the fees listed below.  If you see that you are being charged for something that was not on your merchant account agreement, contact your merchant account provider immediately.

Merchant Account Fees

But there are so many fees associated with accepted a credit card.  Some of the fees are (in no particular order):

• (Qualified) Discount Rate
• Authorization Fee
• Transaction Fee
• Electronic Gateway Fee
  • Set-up Fee
  • Monthly Fee
• Batch Settlement Fee
• Address Verification Service (AVS) Fee
• Chargeback Fee
• Retrieval Request Fee
• Batch Closure Fee
• Early Cancellation Fee
• Monthly Minimum Fee
• Cancellation Fee
• Monthly Fee
  • Statement Fee
  • Customer Service Fee
• Yearly (Club) Fee
• Point-of-Sale (POS) Terminal (lease or buy)
• Mid-Qualified Rate
• Non-Qualified Rate

Some fees above range from $.05 to $50.00.  A lot of the fees can also be negotiated by you, especially if you have a lot of volume. And most of these - you won't ever see. 

Discount Rate

The discount rate is a percentage of the sale.  The more volume you have, the lower the discount rate will be.  Right now, some providers are offering 2.39%.  Usually you can get a discount rate lower than this, even if you are only doing $10,000 a month.

Transaction Fee

This fee is usually imposed by the electronic payment gateway. You will see some gateways giveaway a number of transactions per month, some might charge $.10 per transaction, some might charge a percentage and some don't charge anything.

Authorization Rate

This is sometimes called a transaction rate as well. It is usually about $.25 per transaction.  And usually it is a fixed-fee.

Electronic Payment Gateway Fee

This set-up fee can usually range from $0.00 to about $500.00 per month, depending on the gateway.  The monthly fee is around $15.00-$50.00 a month.  Take into consideration the number of transactions that you get for free as well when determining what is the best monthly fee for your account.

Early Cancellation Fee

Usually most merchant account providers request some type of a commitment, ranging from six months to three years.  And some providers will give you more discounts if you sign up for a longer contract.  Most businesses usually plan on being in business for years, so a 6-month contract is usually nothing to them.

Batch Settlement Fee

This fee is usually the same amount as the authorization fee from the merchant account provider.  This fee is usually charged when the merchant account provider moves the money into your checking account.

Address Verification Service (AVS) Fee

This fee is usually $.05-$.10 per transaction. This is your first line in defense on preventing fraud. Usually with recurring billing done via the electronic payment gateway, the AVS does not need to be accomplished and you will not be charged.

Chargeback Fee

This fee is charged to you if a consumer calls the issuing bank to dispute the charges.  There are Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks.

Retrieval Request Fee

This fee is sometimes charged along with a chargeback. It's a fee that the providers charge to pull all the information on the transactions. This fee can also be just when the consumer does not remember the transaction and requests more information about it.

Batch Closure Fee

This fee is charged when the your batch is closed. (A batch is a number of transactions that are ready to be closed.)  Usually this fee is the same as an authorization fee and providers usually charge this to deter merchants from running scores of batches per day.  Most providers will automatically batch your transactions daily.

Monthly Minimum Fee

This fee guarantees the merchant account provider a set amount each month from the merchant.  Usually though, this never affects the merchant.  For example, let's say your discount rate is 2.25% and the monthly minimum on your merchant account agreement is $25.00.  During the month of April, you processed $10,000.  The merchant account provider's portion would be $225.00 (10,000 * 2.25%).  The monthly minimum fee of $25.00 has been met and no charges should be applied.

Let's say you were just starting out and you did $1,000.00 that month.  The merchant account provider's portion would be $22.50, so you would still owe the merchant account provider $2.50. 

Cancellation Fee

Some providers will charge this fee when your contract ends.  Usually this fee is waived and most are veering away from this fee.

Miscellaneous Monthly Fees

Some providers will charge some type of a monthly fee, usually $10.00-$25.00 a month.  They might call it a statement fee, a customer service fee, or just monthly fee.

Yearly (Club) Fee

Some providers have a yearly fee as well as the monthly fee. They might offer you specials for signing up for this fee.  Or this fee might not be optional and you might have to pay a yearly fee to have a merchant account with that provider.

Point-of-Sale (POS) Terminal (lease or buy)

This equipment would only be if you had a retail business.  The terminal would be used to swipe the consumer's credit card.  you can also use electronic gateways like LinkPoint with a cherry keyboard to swipe the credit card and still get the swiped discount rate.

Mid-Qualified Rate

This rate is applied to certain transactions when specific credit card types are used. This rate will usually only apply to retail businesses.  Some providers might downgrade reward cards - ask your merchant account provider for more information.

Non-Qualified Rate

This rate is applied to certain transactions when specific credit card types are used, i.e. business or corporate cards.  Ask your provider to reduce this amount if your business accepts a lot of cards that are downgraded.  Other reasons that some providers might downgrade your transaction(s) to the non-qualified rate are:

• AVS is not done on a keyed transaction
• Batches are not done in a timely manner - be very careful with this one, if you are late all transactions in that batch will be downgraded
• A special card is used and the correct data was not entered (Level I, Level II, Level III data)
• A credit card was used that was not issued in the United States
• A credit card number was keyed in on a swiped account

Of course these rates vary per processor and the rules vary as well.

Your merchant account provider should be able to answer the above with ease.  These are the very basics of the credit card industry.

Manually Processing Credit Cards

Wednesday, April 25, 2007

A lot of merchants think they can use their swiped merchant account for their e-commerce solution.  A swiped merchant account is given to the merchant on the pretext the merchant will verify the credit card holder while doing the transaction using Visa's credit card security features or MasterCard's security features. If you suspect suspicious activity during the transaction, you might want to make a Code 10 call.

When a merchant is given a merchant account, the merchant assumes some risks and responsibilities.  These risks are also assumed by the merchant account provider, acquiring bank, issuing bank, and the card associations.  Basically there are two types of merchant accounts - one for your brick and mortar store, sometimes known as a swiped account, an internet merchant account, and a mail-order / telephone (MOTO) account.  The internet and MOTO accounts are sometimes known as keyed accounts.  You will need an electronic payment gateway, i.e. LinkPoint, Payflow, or Authorize.net, to help process the transaction.  You can also accept credit cards over the telephone with an internet merchant account because the risks are very similar. 

Higher Risks

You have no way of verifying the cardholder on an keyed account as you would on a swiped account. The risks that the merchant assumes is usually passed through as a discount rate.  Since the risk is greater on a merchant keying in a transaction, usually the merchant account provider will downgrade this transaction.  This usually will result in a higher discount rate being charged on the transaction.

Even More Risks - Storing Cardholder Data

Plus you will need to store cardholder data, which you will need to be PCI compliant, to get the credit card number. Failure to comply could be very costly, especially to the small business owner.

Merchant Account Agreements

Read your merchant account agreement - it might even say that you only will swiped a certain per cent of your transactions a month.  This could be very costly in time making sure you do not violate this agreement.  I have even seen some providers raise the rates to over 3% on a swiped account because the merchant was keying in all of his transactions.  They claimed it was for his excessive chargebacks (he only had one in three years).  He immediately signed up for a MOTO merchant account. 

Savings

Let's say that you have 30 transactions that month at $50.00 each.  So you take time out of your busy day to enter the credit card number into your POS terminal.  And the provider charges you 1.9% on top of your 1.69% that you are already paying.  You would be paying about $63.00 a month for this.  This also does not include any time that you might need to use to call the customer because the credit card transaction failed. 

Internet Merchant Account

With an internet merchant account, you would probably be spending about the same amount of money.  But a few big differences that come to mind are:

• You are not doing anything that is against your contract that could get your merchant account terminated and you end up on the MATCH list
• Your customer knows immediately if his / her ordered was approved or denied
• You have a more professional look - having the transaction processed on your secure website
• You have saved your valuable time
• You can sleep well at night knowing that no credit card numbers will be compromised if your website is hacked
• There is no need to be PCI Compliant (even though it is a good idea), saving you hundreds of dollars up-front.

Level I, Level II, Level III Data

Friday, April 20, 2007

Some of the buzzwords in the merchant account business seems to be Level I, Level II, and Level III data.  Even though this information has been around for quite some time, April is the big month for card association changes.  And some of the changes affected the regulations on how this data is processed.  But exactly what is this data?

Level I Data

Level I data includes:

• Date
• Merchant Name
• City
• State
• ZIP Code

which is not prompted by the terminal.  The merchant will need to enter the purchase amount which also includes sales tax. 

Level II Data

Level II Data includes:

• Date
• Merchant Name
• Tax ID
• Merchant Type Code
• Merchant Category Code (MCC)
• City
• State
• ZIP Code

This information will automatically programmed into your terminal and you should not need to enter it.  The merchant will then need to enter:

• Purchase Amount Excluding Sales Tax
• Sales Tax
• Local Tax Indicator
• Customer Code (if using a purchasing Card)

Your terminal should prompt you to enter the above information for all Level II transactions.

Level III Data

Level III Data includes:

• Date
• Merchant Name
• Tax ID
• Merchant Type Code
• Merchant Category Code (MCC)
• City
• State
• ZIP Code

This information will automatically programmed into your terminal and you should not need to enter it.  The merchant will then need to enter:

• Purchase Amount Excluding Sales Tax
• Sales Tax
• Local Tax Indicator
• Customer Code (if using a purchasing Card)
• Full Line Item Details

Your terminal should prompt you to enter the above information for all Level III transactions.

Enhanced Data

With Level II and Level III data, some merchants can require even more specific data depending on their category.  Some examples are:

• Fleet
  • Level II Data
    • Vehicle or Driver ID Number (AKA Customer Code)
    • Fuel Type
    • Fuel Quantity
    • Fuel Unit of Measure
    • Fuel Unit Cost
    • Fuel Tax Exemption Status
    • Gross Fuel Price
  • Level III Data
    • Odometer Reading
    • Service Type
    • Net Fuel Price
    • Non-Fuel Gross/Net Price
    • Item Discount Amount
    • Item Description
    • Item Commodity Code
    • Item Unit Cost
    • Item Quantity
    • Item Unit of Measure
    • Item Total
• Airline Itineraries
  • Level II Data
    • Merchant Name / Original Ticker Number
    • Passenger Name
    • Departure Date
    • Origination City / Airport Code
    • Travel Agency Code / Name
    • Detailed Data for up to four legs of Travel
      • Carrier Code
      • Services Class
      • Stop-over Code
      • Destination City / Airport Code
  • Level III Data
    • Restricted Ticket Indicator
    • Total Fare / Tax / Fee Amount
    • Currency Code
    • Exchange ticket number and amount
    • Internet Indicator
    • Electronic Ticket Indicator
    • Conjunction Ticker Number
    • Ticket Issue Date
    • Fare Basis Code
    • Control ID detailed information for up to 198 legs of travel
• Hotel Folios
  • Level II Data
    • Check-In Date
    • Hotel Folio Number
    • Number of Room nights
  • Level III Data
    • Daily Room Rate
    • Summary Tax Elements
    • Telephone and FAX Charges
    • Gift Shop Purchases
    • Movies Charges
    • Health Club Charges
    • No Show Indicator
    • Business Center Charges
    • Laundry Charges
    • Check In / Out Dates
    • Food & Beverages & Mini Bar Charges
    • Folio Number
    • Parking & Valet Charges
    • Cash Advances
    • Non-Room Charges
• Purchasing
  • Level III Summary Data
    • Ship to / from ZIP Code
    • Destination Country Code
    • VAT invoice Reference Number
    • VAT tax amount / rate
    • Discount Amount
    • Freight / Shipping Amount
    • Duty Amount
    • Order Date
  • Level III Line Item Detail
    • Item Description
    • Item Quantity
    • Item Unit of Measure
    • Item Total
    • Item Commodity Code
    • Item Product Code
    • Item Unit Cost
    • Item VAT Tax Amount / Rate
• Car Rentals
  • Level II Data
    • Days Rented
    • Car Rental Agreement Number
    • Renter Name
    • Check-Out Date
  • Level III Data
    • Daily/Weekly Rental Rate
    • Check Out/In Date
    • Location/City of Car Return
    • One-way/Drop-off Charges
    • Late Return Charges / Hourly Rate
    • Insurance Charges
    • Fuel Charges
    • Regular and Extra Mileage Charges
    • Total Tax/VAT
    • Telephone Charges
    • Car Class Code
    • No Show Indicator
    • Extra/Other Charges
• Shipping and Overnight Courier Services Data
  • Level III Data
    • Tracking Number
    • Pick up Date
    • Origin/Destination Country Code
    • Number of Packages
    • Origin/Destination Name and Address
    • Item Service Description
    • Item Unit of Measure
    • Item Weight
    • Item Discount Amount
    • Item Net / Tax Amount
• Temporary Help Services Data
  • Level III Data
    • Employee/Temporary Name
    • Social Security Number
    • Description
    • Cost Center
    • Week Start / End Date
    • Rate Indicator

This data might be be passed back to the consumer if the merchant has not made the investment of such terminals.  Merchants are only likely to pass this data if their is a demand for it.  Merchants who have made the necessary changes to their systems will be capable of passing this enhanced data through their card systems.  

Looking for a Cheaper Merchant Account Provider

Sunday, April 01, 2007

A lot of times, people go looking for the cheapest merchant account provider.  I totally understand that people want to save money.  However, a lot of times, when you are dealing with a few basis points - you are only dealing with a few dollars every month.  And the time that you have put in trying to get a better deal even though you know the provider is top notch, costs you more money in the long run.

For example, let's say that you are going to be doing $10,000 a month.  And this largest merchant account provider wants to charge you 2.44% for your discount rate.  And chances are, it will cost more to maintain your account but the provider still wants to do business with your company.  But you found another processor who is willing to offer you 2.29%.  Now the actual difference in this is about $15.00.  And chances are, you charge $150.00 an hour at least for your time.  In the time that you have taken to inquire about a cheaper rate, you probably have already spent the $15.00 and then some.  And you know that the other provider might be smaller and could not support all your needs when your business grew.

Or maybe Visa and MasterCard raised their rates.  So the merchant account provider decided to pass along those fees to you, the merchant.  And let's say you are doing $10,000 a month.  At raising your discount rate 4 basis point (.04 per cent), it is basically $4.00 more a month that they are charging you.  The time you have taken out of your schedule to possibly complain to others, etc., is time that you have wasted.  And of course, you understand that usually these smaller companies actually cost more to maintain but you would rather have a large, stable company process your credit card transactions.

The best thing, of course, use a large, stable, reliable processor - since this is your money in the end.  Pay a few extra dollars a month to know that you have a multi-million dollar company behind each transaction.

Merchant Accounts Agreements

Friday, March 23, 2007

When you sign up with a merchant account provider, they want a contract.  This contract helps to ensure the provider that you will do some type of business with them.  Most businesses start because people want to make money.  And to make money, businesses sell services and products to others.  This merchant account agreement helps to ensure that you, as a merchant, will provide a business to the provider and will also stay in compliance with regulations set forth by the provider, by the acquiring bank, and by Visa and MasterCard. 

Some providers want you to sign an agreement for one year, two years, maybe even three years.  This not only protects the provider in knowing he will have a customer (the merchant) for a number of years, but it also protects, you - the merchant.  As the merchant, this contract ensures that you will have the processing capability that you will rely on.  Without this, you the provider could shut down at anytime without any recourse.  You, as the merchant, would be left without a merchant account provider, unable to process any credit card transactions and not making any money. 

When getting a merchant account, look to see how long the company has been in business.  Check to see if they are a public company and to see how much they are worth.  You want to know that the company you are going to choose is stable and reliable.  You want to know that the company you choose to process your credit card transactions will always be there for you and is not a fly by night company.  Also check out Choosing a United States Merchant Account Provider to see what information to look for.

Merchant Account Fraud

Friday, March 09, 2007

When applying for a merchant account, merchants tend to look for the cheapest processor.  This might be OK for some, but for others, you might want to consider who you are giving your personal information to. 

Merchant account providers' websites should always contain the acquiring bank name and if they are an ISO or MSP.  I know I wrote about this last April, but it always bears repeating about this time of the year.  Why?  Because April is usually the month that the interchange rates are increased by Visa and MasterCard.  And merchants get the notification that their rates will be increasing and they think that if they go to another provider, they will get cheaper rates.  Usually this is not the case and you will have a better chance at getting a better rate if you contact your current merchant account provider. 

Check choosing a United States Merchant Account Provider to remember the most simplest rules set forth by Visa and MasterCard to help to identify the company you wish to do business with.  If the provider does not have this, think twice about giving this company your personal information. 

Always choose a reputable company when picking a merchant account provider.  Know who you are dealing with, after all, it is your money as well.  Spending a little extra might be worth it - you will be less concerned that the provider will go bankrupt.

Credit Card Logos

Friday, February 23, 2007

http://www.mastercardbrandcenter.com/mcbrand/us/getourbrand.do When accepting credit cards on your website, you want customers to know what card associations (Visa, MasterCard, Discover, American Express, etc.) that you accept.  Each card association has their authorized logos available from their website for you to download and display. Usually, when you apply for a merchant account, Visa, MasterCard, and Discover brands are automatically included in your merchant account and American Express will require separate approval.

Visa Logo

The Visa logo is used to show that you accept Visa credit cards and possibly debit cards on your website.  Most debits cards issued today will have a Visa or MasterCard logo on them.  If your debit card has this, chances are that you can use your card anywhere Visa is accepted.  Visa Brand Mark Artwork has the instructions and logos that you can download to use on your website.

MasterCard Logo

The MasterCard logo is used to show that you accept MasterCard credit cards.  MasterCard actually has two images.  One is acceptance marks to indicate that you accept MasterCard.  Another is the brand mark which is used to when you are marketing or promoting MasterCard's products and programs.  You can download the MasterCard Acceptance Marks or Brand Marks from MasterCard's official website.  These images are permitted when you accept MasterCard.

Discover Logo

The Discover Logo is used to show that you accept the Discover Card as a payment option. If you do not use the Discover Logo, you must use the text Discover Network to show customers that you accept the Discover Card.  And if you are talking to customers over the phone, you should ask the customer if they will be using the Discover Network Card to pay for the purchase.  You can download the Discover logos from their official website to use on your e-commerce driven website.

American Express Logo

The American Express logo is used to show that you accept American Express on your e-commerce website.  You can download American Express's logos from their official website after providing some more information as well to American Express.

As you can see though, most of the website above will provide the card association's logos.  Just make sure you are familiar with each of the card associations regulations on displaying their logo on your website.

Code 10 Calls

Wednesday, February 07, 2007

When something does not look right, i.e. the security features look altered or they are missing, keep the card in your possession and make a Code 10 call to your authorization center.  You may be asked to keep the credit card or you might be instructed to return the card.  If your authorization center tells you it is ok, write down the authorization number on the sales receipt.

Code 10 calls allow merchants to alert card issuers to suspicious activity and take appropriate action when instructed to do so. You should make a Code 10 call to your voice authorization center whenever you are suspicious about a card, cardholder, or a transaction. The term "Code 10" is used so the call can be made at any time during a transaction without arousing a customer's suspicions.

How to Make a Code 10 Call

• Keep the card in your possession during the call.
• Call your voice authorization center, and say, "I have a Code 10 authorization request."

The call may first be routed to a representative at your merchant bank who may need to ask you for some merchant or transaction details. You will then be transferred to the card issuer and connected to a special operator who will ask you a series of questions that can be answered with a simple yes or no.
• When connected to the special operator, answer all questions calmly and in a normal tone of voice. Your answers will be used to determine whether the card is valid.
• Follow all operator instructions.
• If the operator tells you to pick up the card, do so only if recovery is possible by reasonable and peaceful means.

If for some reason, you do not feel comfortable making this call during the transaction, you can still call the authorization center after the consumer has left your store.  Doing this might help to prevent more fraudulent transactions to another merchant.

Fighting Fraud in your E-Commerce Store

Monday, January 01, 2007

Card association payer authentication (e.g. Verified by Visa (VBV), MasterCard SecureCode (MSC)) is becoming increasingly more important in online transactions. Also knowing whether the consumer is near his or her billing address by using Geo-IP. Other merchants would like to know if the consumer has a tendency to do a chargeback, maybe consumer purchasing behavior.

Verified by Visa / MasterCard SecureCode

I wrote some things regarding VBV / MSC a few months ago and it still holds true today. VBV merchants are protected from chargebacks on the Reason Code 83 (I didn't do it). MasterCard users though have to be enrolled in MSC for you, the merchant, to be protected.

Consumer Purchasing Behavior

While a number of electronic payment gateways use First Data's Nashville platform to process the credit card transaction, First Data maintains these transactions per Visa and MasterCard regulations. Using software developed by Fair Isaac Corporation, LinkShield™ is available to LinkPoint merchants. A few gateways that use First Data's Nashville Platform include:

• LinkPoint Secure Payment Gateway
• Authorize.net Electronic Payment Gateway
• Verisign's Payflow Services
• PC Charge
• Cybersource
• Jettis
• USA ePay
• Yahoo®

This is just a small percentage of electronic payment gateways that use the First Data Nashville Platform as their transaction processor. First Data takes these transactions and profiles them. When using the LinkShield™ product along with the LinkPoint Secure Payment Gateway, the merchant has the ability to accept or decline the transaction based on the score that First Data provides. First Data also provides another optiion using the ClearCommerce® FraudAnalyzer

FraudAnalyzer uses neural network technology to score fraud risk in real-time. The model was developed by examining extensive transaction and chargeback data supplied by ClearCommerce's Fraud Data Consortium, which includes millions of e-commerce transactions supplied by thousands of merchants. With the addition of FraudAnalyzer, the ClearCommerce® Engine is the only transaction processing software that integrates merchant rules, neural network risk scoring, service data and human review to minimize credit card fraud costs.

Preventing Online Fraud

Monday, December 18, 2006

One of the first things you need to do as a merchant is to verify the consumer. On card-present transactions, this can easily be done by asking for a valid photo identification card, i.e. a driver's license or state issued ID card. On card-not-present-transactions, this is much more difficult for the merchant to accomplish.

Basic Fraud Prevention Techniques - Steps One and Two

Address Verification

The first step in preventing fraud in a card-not present environment is called address verification. The consumer will enter their billing address. The gateway will send this information over to the transaction processor (usually First Data or Nova) for verification. The transaction processor will send back some codes to let you know that the AVS was a match or not. Usually this match is done on the street number and ZIP code only. So if the street address was 1234 Main Street and the ZIP code was 90210, the transaction processor would take a look at 1234 and 90210. The alpha characters are not verified.

Once this is completed, you will want to seriously consider sending your product to the billing ZIP code. This will help to prevent some of the chargebacks but will also cause some problems if the consumer works all day. The shipping companies have become so inundated with packages from the ever-growing business, that they will drop the package at the door, not waiting for a signature. Without a signature, you do not have proof of delivery.

AVS is subject to a significant rate of "false positives" which may lead to rejecting valid orders as well as missing fraudulent orders. If the cardholder has a new address or a valid alternate address (such as seasonal vacation home), this information may not be up-to-date in the records of the cardholder's issuing bank, so the address would be flagged as invalid. Merchants typically do not rely solely on the AVS result to accept or reject an order. Approximately 75% - 80% of online merchants rely on address verification service as a tool to help prevent fraud.

CVV2 / CVC2 / CID

Card Verification Value 2 / Card Identification Number

Visa calls the three digit number a CVV2 (Card Verification Value 2). MasterCard call it CVC2. American Express and Discover call this CID. This number is found on the back of the of Visa, MasterCard, and Discover cards. It is a four digit number on the front of American Express. At first the card associations came out with this number to curb fraud. The card associations told the merchants - do not store this number. They thought this would potentially stop most of the fraud. However, these numbers can be obtained by fraudsters just as credit card numbers are obtained. The CVV2 / CVC2 / CID usage by online merchants has continued to increase rising from 44% of online merchants using this tool in 2003 to 66% today. It appears that asking for the CVV2 / CVC2 / CID has become standard practice for many online merchants in 2005.

The purpose of card verification number in a card-not-present transaction is to attempt to verify that the person placing the order has the card in their possession in order to provide the additional security digits. Requesting the card verification number during an online purchase can add a measure of security to the transaction. Approximately 66% - 75% of online merchants rely on this number to help reduce fraud.

Adding a Surcharge to a Credit Card Transaction

Wednesday, December 06, 2006

Usually in your merchant account agreement, it will state that you cannot charge any additional fees to the consumer if they pay using a credit card instead of cash.

However, debit cards and credit cards have different rules and regulations. Interlink Debit grandfathered in organizations about ten years ago that were using their system to accept payment. Interlink allows these merchants to charge a surcharge specifically when a consumer pays and it goes through the Interlink debit system.

Credit card companies also allow the merchant to surcharge the consumer if and only if:

• Charged for a bona fide convenience outside of the merchants customary payment channel
• Disclosed to the cardholder as a charge for alternative payment channel
• Added only to non face to face (if merchant is face to face merchant)
• A flat or fixed amount
• Applicable to all forms of payment
• Disclosed prior to completing transactions
• Included in total amount of transaction

Meeting the above requirements, remember will be in the credit card associations (Visa, MasterCard, etc) and your merchant account provider. Before doing any type of surcharging, contact your merchant account provider and / or the associations for specifics.

I do not recommend this be done because if it does not follow the guidelines as set forth between your merchant account provider, the card associations, and yourself, you might find yourself without a merchant account and on the MATCH list.

How Credit Card Numbers Are Determined

Sunday, November 26, 2006

The card number itself comes from ISO 7812 standards. The first digit on the card will tell you what category it is in per the standards. Four and five identifies the card as banking and financial and six identifies the strip as merchandizing and banking. Three is actually travel and entertainment. The number itself has a structure to it - the first six digits being the Bank Identification Number (BIN).

MasterCard

MasterCard will usually begin with 51-55 with 16 digits. Usually the first six digits is the BIN and the next nine digits are your account number while the last number is a checksum for the mod-10 algorithm.

Visa

Visa credit card numbers will begin with a four and have 13 or 16 digits. It can be presumed though that most cards issued with the Visa logo will have 16 digits. Usually the first six digits is the BIN and the next nine digits are your account number while the last number is a checksum for the mod-10 algorithm.

American Express

American Express will usually begin with a 34 or 37 and have 15 digits.

Diner's Club

Diner's Club will usually begin with a 36 or 55. Those beginning with a 36 should have 14 digits will those beginning with 55 will have 16 digits. Keep in mind that in the last quarter of 2004, MasterCard and Diner's club formed an alliance. Cards issued in Canada and the USA start with 55 and are treated as MasterCards worldwide. International cards use the 36 prefix and are treated as mastercards in Canada and the US, but are treated as Diner's Club cards elsewhere.

Discover Card

Discover Card card will usually begin with 6011 and have 16 digits. Check out Standard Security Features Common to Discover Network Issued Credit Cards for more information.

Also check out this PDF for a bit more information: Card Security Features.

There are a few other organizations like JCB, Maestro, Solo, Switch, Visa Electron that can be found, however a lot of these are debit cards which might require a personal identification number (PIN) to be used with the transaction. Currently providers are unable to handle this PIN via the internet due to security reasons so you, as a merchant, might not be able to accept them.

Non Receipt of Goods or Services Chargeback Codes

Wednesday, November 08, 2006

There is only one chargeback reason code in this group. These chargebacks can happen from time to time if the consumer claims the services were not provided or the goods were not delivered - maybe even not received in a timely fashion.

Reason Code 30: Services Not Provided or Merchandise Not Received

Reason Code 30 can happen when card issuer receives a claim from a cardholder the merchandise or services ordered were not received or the cardholder cancelled the order as the result of not receiving the merchandise or services by the expected delivery date.

The most common causes is when the merchant:

• Did not provide the services
• Did not send the merchandise
• Billed for the transaction before shipping the merchandise
• Did not send the merchandise by the agreed-upon delivery date

Notified of a Chargeback

If the merchandise was delivered by the agreed-upon delivery date, contact the merchant account provider with details of the delivery or send your merchant bank evidence of delivery, such as a delivery receipt signed by the cardholder or a carrier's confirmation that the merchandise was delivered to the correct address. If the merchandise was software that was downloaded via the Internet, provide evidence to your merchant bank that the software was downloaded to or received by the cardholder.

If no delivery date has been specified, and the card issuer charged back the transaction less than 30 days from the transaction date, send a copy of the sales receipt to your merchant bank pointing out that 30 days have not yet elapsed. You should also state the expected delivery date.

If the specified delivery date has not yet passed, return the chargeback to your merchant bank with either information or a copy of the documentation showing the expected delivery date.  In general, you should not deposit sales receipts until merchandise has been shipped.  For custom-made merchandise, you may deposit the entire transaction amount before shipping, provided you notify the cardholder at the time of the transaction

If the merchandise was shipped after the specified delivery date, provide your merchant bank with the shipment date and expected arrival date, or proof of delivery and acceptance by the cardholder.

If the contracted services were rendered, provide your merchant bank with the date the services were completed and any evidence indicating that the customer acknowledged receipt.

To Help Prevent Chargeback Reason Code 30

If delivery of merchandise is to be delayed, notify the customer in writing of the delay and the expected delivery date.  As a service to your customer, give the customer the option of proceeding with the transaction or cancelling it (depending on your customer service policy).

If you are shipping merchandise without requesting proof of delivery, consider the costs and benefits of doing so compared to the value of the merchandise you ship.  Proof of delivery - such as certified mail or a carrier's certification that the merchandise was delivered to the correct address and signed for by the cardholder - will allow you to return the chargeback if the customer claims the merchandise was not received.

If you sell software that can be downloaded via the Internet, it is suggested that you design your web site to enable you to provide evidence to the merchant account provider that the software was successfully downloaded and received by the cardholder. You might even consider using extra scrubbing techniques like Verified By Visa and MasterCard Secure Code and using fraud protection services like LinkShield™ available with a merchant account through LoudCommerce and using the LinkPoint Secure Payment Gateway.

Cancelled or Returned Chargeback Codes

Thursday, November 02, 2006

These chargebacks from Visa can easily be prevented by the merchant as long as the merchant provides timely refunds to the cardholder. If you sell items via the internet, keep the communication open with the consumer to also help prevent chargebacks of this nature.

Reason Code 41: Cancelled Recurring Transaction

This usually happens when the cardholder notifies the issuing bank and tells them the recurring transaction was cancelled but the merchant is still charging the cardholder; transaction amount exceeds the pre-authorized dollar amount range; or the merchant was supposed to notify the cardholder prior to processing each recurring transaction but has not done so.

The most common causes are:

• Cardholder
  • Withdrew permission to charge the account
  • Cancelled payment of a membership fee
  • Cancelled the card account
• Card Issuer
  • Charged back a previous recurring transaction, and the cardholder did not expressly renew
  • Cancelled the card account
• Merchant
  • Received notice before the transaction was processed that the cardholder account was closed
  • Exceeded the pre-authorized dollar amount range and did not notify the cardholder in writing within ten days prior to processing the transaction
  • Notified the cardholder in writing within 10 days of processing the recurring transaction, after which the cardholder notified the merchant not to charge the account

Notified of a Chargeback

If the transaction was cancelled and credit issued for the recurring transaction, notify your merchant bank of the date that the credit was issued. If the transaction was cancelled and a credit was not issued, accept the chargeback. Do not issue a credit since the chargeback has already been processed.

If the transaction was not cancelled or you have no record of the cancellation, accept the chargeback. The cardholder does not have to supply evidence that you received the cancellation notice.

If the customer claimed they were billed for the service after they cancelled, notify your merchant bank that the bill in question covered services used by the customer between the date of the customer's prior billing statement and the date the customer requested cancellation. You might also need to provide proof as well.

Reason Code 53: Not as Described or Defective Merchandise

This can happen when the cardholder notifies the card issuer that the goods and / or services were:

• Not the same as shown and described on the screen for Internet transactions, or as described on the sales receipt or other documentation presented to the cardholder at the time of the transaction
• Not the same as the merchant's verbal description for a telephone transaction
• Shipped to the cardholder and received, but was damaged or defective

Note

Merchants should keep in mind that their return policy has no bearing on disputes that fall under Reason Code 53: Not as Described or Defective Merchandise.

For this reason code, the cardholder must have made a valid attempt to resolve the dispute or return the merchandise. A valid attempt to return may be to request that the merchant come retrieve the goods at their own expense.

The most common causes are:

• The merchant sent the wrong merchandise to the cardholder
• The merchandise was damaged during shipment
• The merchant inaccurately described the merchandise or services
• The merchant did not cancel the services purchased by the cardholder
• The merchant did not perform the services as described
• The merchant did not accept the returned merchandise
• The merchant accepted the returned merchandise but did not credit the cardholder's account

If credit was processed and merchandise was returned or services were cancelled and a credit was processed to the cardholder's account, provide your merchant bank with information or evidence of the credit.

Some Possible Remedies for Chargeback Reason Code 53

• If you have not received the returned merchandise (double-check your incoming shipment records to verify) or the cardholder has not cancelled the service, advise your merchant bank. (The cardholder must make a valid attempt to return merchandise or cancel the service.)
• If the merchandise was as described, provide your merchant bank with specific information and invoices to refute the cardholder's claims.
• If merchandise was returned because it was damaged, provide evidence that it was repaired or replaced.
• If the service performed was as described, provide your merchant bank with as much specific information and documentation as possible refuting the card-holder's claims.. It is recommended that you specifically address each and every point the cardholder makes

If the cardholder's complaint is valid and you received the returned merchandise but have not yet credited the cardholder's account, accept the chargeback. Do not process a credit since the chargeback has performed this function.

To Help Prevent Chargeback Reason Code 53

• Ensure that descriptions of merchandise or services shown in catalogs, on Internet screens and sales receipts, or used in telephone order-taking scripts are accurate, complete, and not unintentionally misleading.
• Regularly review your shipping and handling processes to ensure that orders are being filled accurately.
• Train staff on proper procedures on taking and filling orders, and schedule review sessions at least annually.

Miscellaneous Information on Chargeback Reason Code 53

• Chargeback Amount Is Limited - The chargeback amount is limited to the amount of the merchandise returned or services cancelled . The chargeback may include ship-ping and handling fees for shipment of the defective merchandise.
• Card issuer Waiting Period - If merchandise was returned, the card issuer must wait at least 30 calendar days from the date the cardholder returned the merchandise (to allow sufficient time for you to process a credit to the cardholder's account) before generating a chargeback.
• Quality Disputes - This chargeback code also may be used for quality disputes (for example, a car repair situation).

Reason Code 85: Credit Not Processed

This can happen when the card issuer received a notice from a cardholder acknowledging participation in a transaction for which goods were returned or services cancelled, but the cardholder has not received a written refund acknowledgement or credit voucher from the merchant or the credit has not appeared on the customer's Visa statement.

Some Possible Remedies for Chargeback Reason Code 85

The merchant

• Did not issue a credit
• Issued the credit but did not deposit the credit with its merchant bank in time for it to appear on the cardholder's next statement
• Did not issue a credit because the business does not accept returns, but did not properly disclose its return policy

To Help Prevent Chargeback Reason Code 85

If you never received, or accepted, returned merchandise or a cardholder's cancellation, advise your merchant bank immediately. Proof of cancellation is not required from the cardholders. If the cardholder returns merchandise or cancels services in a manner contrary to your disclosed return or cancellation policy, provide your merchant bank with documentation showing that the cardholder was aware of and agreed to your policy at the time of the transaction. Specifically, the cardholder's signature must appear on a sales receipt or other document stating your return policy.

If your establishment's return policy is on the back of a receipt that has been signed on the front and initialed on the back as required by Visa policy, you must provide your merchant bank with copies of both sides of the receipt. If the return policy is on the back of the receipt and is not signed or initialed, you have not provided evidence of proper disclosure

If a customer returns merchandise or cancels services in accordance with your disclosed return or cancellation policy, and you have already issued a credit, inform your merchant bank of the date that the credit was issued.

If a customer returns merchandise or cancels services in accordance with your disclosed return or cancellation policy, and if you have not already issued a credit, accept the chargeback. Do not process a credit since the chargeback already has performed this function.

Card Not-Present Transactions

Ensure that your establishment's return or refund policy is always clearly stated in your printed advertising materials, catalog and catalog order forms, and, for Internet merchants, on your electronic order screen. Always explain your policy to customers who place orders by phone. Be sure to include refund information with the initial transaction. For Internet transactions, your web site should include a screen with your return or refund policies, which appears automatically during the check-out process (that is, it is not on a separate disclosure screen that the customer has to click to open). The screen should include I Accept or Agree buttons for the customer to click on before completing the transaction, indicating that he or she has read and agrees to your policies.

Describing your return policy in a catalog or verbally on the phone does not constitute proper disclosure unless you also obtain a customer signature indicating disclosure was provided. Such policy descriptions may support your case for having alerted the customer to your policy.

If a cardholder can complete an Internet transaction without clicking an Accept or Agree button to indicate acceptance of your refund, return, or cancellation policy, proper and adequate disclosure has not occurred.

Gift Returns

In cases where a gift recipient has returned a gift ordered by mail, telephone, or Internet, you may provide a cash or check refund, an in-store credit receipt, or another appropriate form of credit to the gift recipient. If the cardholder claims a credit was not issued to his or her account for the gift, provide appropriate documentation or information to your merchant bank that the credit was given to the gift recipient.

For gift returns, if credit is to be used to a charge card, the credit must be issued to the same Visa account number that was used for the original transaction.

No-Return Policy Disclosure

If your business has a limited return policy or does not allow returns at all, the words "no returns" or similar words must be preprinted on all copies of the sales receipts near the cardholder signature line.

Authorization Error Codes for Chargebacks

Saturday, October 28, 2006

Authorization errors can happen from time to time. If the merchant is in a hurry and does not place close attention to the POS terminal as the transaction is being processed, there is a chance that the transaction could be charged back by the issuing bank.

Reason Code 70: Account Number on Exception File

This is when the card issuer received a transaction that was below the merchant's floor limit and the account number was listed on Visa's Exception File maybe because the merchant either did not check the Exception File or received a negative response.

The most common cause is when the merchant processes the transaction below its floor limit without making sure that the exception file had been checked. Floor limits are typically specified in merchant agreements, and the exception file is part of the merchant bank's or third-party processor's transaction processing system; that is, it should be automatically checked when a card is swiped. Floor limits are zero for all card-not-present transactions. This means that they always require authorization regardless of the dollar amount of the transaction.

If you are notified of the chargeback and you did check the Exception File, inform your bank the date that the Exception File was checked. You do not have to send a copy of the receipt, as the bank should be able to check its transaction log. If you did not check the Exception File, accept the chargeback.

When doing the transaction, check the exception file before completing transactions below your floor limit to help prevent this type of chargeback. With most POS terminals, the exception file is checked automatically when the card is swiped and the dollar amount entered. If in doubt, check with your merchant bank or third-party processor to make sure their transaction-processing system automatically checks the exception file for your under-floor-limit transactions and tell your sales staff that if they are ever in doubt about whether an authorization is necessary, they should request an approval.

Reason Code 71: Declined Authorization

This usually happens when card issuer received a transaction for which authorization had been declined. Usually the merchant attempted to circumvent or override a declined authorization by one of the following methods:

• Forced posting: After a decline response, the merchant forced the transaction through without attempting another authorization request
• Multiple authorization attempts: After an initial authorization decline, the merchant re-swiped the card one or more times until the transaction was authorized. In this situation, authorization might occur if the card issuer's authorization system times out or becomes unavailable, and the transaction is forwarded to Visa
• Split transaction: When a transaction for a certain amount is declined, the merchant splits the amount into several smaller transactions, each of which is submitted and authorized separately
• Alternative authorization method: The merchant swiped the card at a POS terminal, and the authorization was declined. The merchant then resubmitted the transaction by key entry or called in a voice authorization, and received an approval

If you are notified of a chargeback and the transaction was authorized, and you have an authorization approval code, inform your merchant bank of the transaction date and amount. Multiple authorizations attempts may not be accepted if the first authorization was declined.

When completing a transaction, obtain an authorization before completing transactions exceeding your floor limit to help prevent this type of chargeback. If you are unable to get an electronic authorization because your terminal isn't working or because the card's magnetic stripe cannot be read, call your voice authorization center. If the transaction is approved, write the approval code on the sales receipt in the appropriate space, and imprint the card's embossed information onto the receipt, using a manual imprinter.

Reason Code 72: No Authorization

This usually happens when the card issuer received a transaction that exceeded the merchant's floor limit and authorization was not obtained. The merchant did not obtain an authorization for a transaction above its floor limit or, for card-present transactions, obtained it after the transaction date. Floor limits are typically specified in merchant agreements. Any transaction above a merchant's floor limit must be authorized.

If you do receive a chargeback, and the transaction was authorized, inform your merchant bank of the transaction date and amount. If the transaction was not authorized, accept the chargeback.

During a transaction, obtain an authorization before completing transactions exceeding your floor limit to help prevent this type of chargeback. The authorization request is sent automatically when you swipe the card and enter the dollar amount. If you are unable to get an electronic authorization because your terminal isn't working or because the card's magnetic stripe cannot be read, you can request an authorization either by key-entering the transaction or calling your voice authorization center. If the transaction is approved, be sure the approval code is on the sales receipt in the appropriate space; in the case of a voice authorization, you will need to write it on the receipt. You should also imprint the embossed account information from the front of the card on a sales receipt or manual sales receipt form, which the customer should sign.

Reason Code 73: Expired Card

This usually happens when the card issuer received a transaction that was completed with an expired card and was not authorized.

Card Not Expired--Key-Entered Transactions

For key-entered transactions, the expiration date should be on the manually imprinted copy of the front of the card. If the expiration date on sales receipt shows the card had not expired at the time of the sale, send a copy of the receipt to your merchant bank. The chargeback is invalid regardless of whether authorization was obtained.

Card Expired, Authorization Obtained

If the card was swiped or a manual imprint made, an authorization approval was obtained as required, inform your bank of the transaction date and amount. Many merchant banks automatically handle this type of chargeback so you never see it.

Card Expired, No Authorization Obtained

If the card is expired and you did not obtain an authorization, accept the chargeback.

When completing the transaction, check the expiration or "Good Thru" date on all cards. A card is valid through the last day of the month shown; for example, if the Good Thru date is 07/10, the card is valid through July 31, 2010 and expires on August 1, 2010.

If the transaction was a MO/TO or Internet transaction, then the expiration date provided by the cardholder is considered correct. Many merchant banks automatically handle this type of chargeback, so you really never see it.

Always request an authorization for transactions on expired cards and submit the expiration date on the card as part of the authorization request. The expiration date is submitted automatically when you swipe a card. If a transaction is not approved, do not complete the sale.

Reason Code 76: Incorrect Transaction Code

This is when the card issuer received a complaint from a cardholder, stating that a debit was received for a transaction that should have been credited to the account. This can happen when the merchant issued a credit voucher but it posted as a sale instead.

If you receive a chargeback, and the correct code was posted, provide your merchant bank with documentation of the transaction, showing that it was posted correctly as a credit to the cardholder's account (and a debit to your account).

If the transaction was posted as a sale, accept the chargeback.

The easiest way to prevent this chargeback is when issuing a credit voucher, be sure to use the credit transaction code on your POS terminal.

Reason Code 77: Non-Matching Account Number

This is when account number transmitted to the card issuer did not match any account number on the card issuer's master file, and the transaction was not authorized. It usually happens when the merchant incorrectly key-entered the account number or incorrectly recorded the account number for a mail order or telephone order.

If you are notified of the chargeback and the account number matches, matches the account number cited on the chargeback, and the transaction received an authorization approval, return the chargeback to your merchant bank and request your bank to include the authorization log for this transaction when returning it to the card issuer. If the account number on the sales receipt does not match the correct account number cited on the chargeback, accept the chargeback, then process a new transaction with the correct account number, and be sure to request an approval code.

Chargebacks on Card-Not-Present Transactions

If the account number on the sales receipt matches the account number cited on the chargeback, and the transaction was authorized as a mail order, telephone order, or Internet transaction, return the chargeback to your merchant bank. Request the bank to include the authorization log for this transaction when returning it to the card issuer. Many merchant banks handle this type of chargeback automatically, so that you never receive them.

If the account number does not match, accept the chargeback.

Transaction Catch

After accepting the chargeback, the new transaction with the correct account number should be submitted within 30 days of the original transaction. Due to the chargeback cycle, in most cases, merchants will be unable to meet this time frame, which may in turn result in a second chargeback for Reason Code 74, Late Presentment.

Card-Present Transactions

If you swipe a card and the terminal cannot read the card's magnetic stripe, request authorization by key entering the account number. Be sure the key-entered account number matches the embossed account number on the card; be careful not to transpose numbers. Use a manual imprinter to imprint the embossed information from the face of the card onto the sales receipt that is signed by the cardholder.

If your terminal is not working or you do not have a terminal, call your voice authorization center for authorization approval and write the authorization approval code on the sales receipt in the appropriate space. Use a manual imprinter to imprint the embossed information from the face of the card onto the sales receipt that is signed by the cardholder

Compare the account number displayed on your terminal or electronically printed on the sales receipt with the account number embossed on the card. If they do not match, do not complete the transaction. Call your voice authorization center and ask for a "Code 10 authorization ." The card issuer may ask you to pick up the card if you can do so safely.

Card-Not-Present Transactions

For phone orders, read the account number back to the customer to verify it.

Recurring Billing

Because recurring payment transactions occur on a regular basis over time, it is possible that the cardholder's account number could be closed or could change (for example, if a new card is issued due to a bank merger or account upgrade). If authorization is declined on a subsequent recurring payment trans- action, contact the customer to obtain updated payment information.

Reason Code 74: Late Presentment

This happens when the card issuer received a transaction after the 30-day time frame and account number is blocked or closed. Usually the merchant did not deposit the sales receipt with its merchant bank within the time frame specified in its merchant agreement. Time limits are set for depositing transactions to ensure timely processing and billing to cardholders. When you hold transactions beyond the period defined in your merchant agreement (usually one to five days), you lose money, affect customer service (cardholders expect to see transactions on their Visa statements within the same or next monthly cycle), and possibly invite a chargeback. No remedies exist for chargebacks on sales receipts deposited 181 days or longer after the transaction date.

If you receive a chargeback, and the sales receipt was deposited within the 30-day time frame, ask your merchant bank to forward a copy of the receipt to the card issuer. If the sales receipt was not deposited within 30 to 180 days of the transaction date and the cardholder account has been closed, the chargeback is valid. If the sales receipt was deposited more than 181 days after the transaction date, accept the chargeback. (In this situation, the cardholder account status is not a factor.)

Deposit Timing Guidelines

Deposit sales receipts with your merchant bank as soon as possible, preferably on the day of the sale or within the time frame specified in your merchant agreement.

If you deposit paper sales receipts, ensure your staff deposits them on a regular schedule within the time frame required by your merchant bank to help prevent this type of chargeback. If you currently process deposits manually, consider the costs and benefits of a transaction data capture system at the point of sale. Transaction data capture sales terminals allow you to electronically deposit your sales transactions after you have balanced them each day. Electronic cash registers are another option. Electronic cash registers can be set up so that your transactions are automatically deposited in batches or on a real-time basis.

Reason Code 80: Incorrect Transaction Amount or Account Number

This happens when the card issuer identified the transaction amount or account number that posted as different from what is shown on the sales receipt. This usually happens when the merchant made a data entry error, i.e., keyed in the wrong amount or account number for that particular transaction.

If you are notified of this type of chargeback and if the transaction amount or account number on the sales receipt is the same as on the clearing record deposited for payment, provide supporting documentation to your merchant bank to re-present the item. If the transaction amount or account number on the sales receipt is not the same as on the clearing record, accept the chargeback. If the chargeback is due to an incorrect account number, process a new transaction using the correct one; however, do not process a credit since the chargeback already has performed this function. For incorrect-amount chargebacks, the chargeback amount will be the difference between the amount charged and the correct amount, so no further action is needed.

Reason Code 82: Duplicate Processing

This usually is when the card issuer received the same transaction more than once for posting to the cardholder's account. It usually happens when the merchant:

• Entered the same transaction into the point-of-sale terminal more than once
• Electronically submitted the same batch of transactions to its merchant bank more than once
• Deposited with its merchant bank both the merchant copy and the bank copy of a sales receipt
• Deposited sales receipts for the same transaction with more than one merchant bank
• Created two sales receipts for the same purchase

If you are notified of this chargeback, provide your merchant bank with information documenting that the two transactions are separate, or send legible photocopies of the alleged duplicate sales receipts and any other related documents, such as cash register receipts, to your merchant bank. The receipts should clearly indicate that the two transactions are not charges for the same items or services. If you have not already deposited a credit to correct the duplicate, accept the chargeback. Do not process a credit now as the chargeback has performed that function. If you identified the duplicate transaction and processed an offsetting credit before you received the chargeback, inform your merchant bank of the date the credit was issued. If your merchant bank requires other procedures, follow them. However, many merchant banks automatically look to see if a credit has been processed, so you may never see these chargebacks.

Review each batch of paper sales receipts prior to deposit to ensure that only bank copies--and not merchant copies--are included. If transactions are sent electronically for processing, ensure each batch is sent only once and as a separate batch number to help prevent this type of chargeback and take care to avoid entering the same transaction more than once.

Reason Code 86: Paid by Other Means

This is usually when the card issuer received a written complaint from the cardholder stating that he or she paid for the transaction by other means, i.e., cash, check, or other type of card. It can happen when the cardholder initially tendered a Visa card in payment for the transaction, but then decided to use cash or a check after a credit card receipt had been completed. The merchant erroneously deposited the credit-card sales receipt in addition to the cash, check, or other payment method.

If you are notified of a chargeback and the Visa card was the only form of payment tendered for the transaction, provide your merchant bank with sales records or other documentation showing that no other form of payment was used. If a Visa card sales receipt was erroneously deposited after another form of payment was used, and a credit was issued, provide your merchant bank with the date of the credit. Many banks automatically search for credit