Merchant Processing Services

Novus Credit Card Processing Transaction Documentation Requirements

2011-07-26T16:45:00.003-04:00

Novus credit card processing transaction documentation submitted by a merchant account provider or a retailer in response to a dispute notice must be compliant with the requirements stated below, as well as with the concrete requirements for each reason code.

All of the following data must be available:

The card number (either the entire 16-digit card number or a truncated one where required by law).
Quantity and a short description of the products or service bought, except for sales receipts which are not required to include this information.
Total transaction amount, including sales tax, tip, etc.
Transaction date.
Authorization code.

Wherever Novus credit card processing transaction documentation is not required to include the quantity and a short description of the products or service bought, you could be required to provide documentation with this information to your acquirer in connection to a dispute.

In addition to the requirements listed above, sales receipts for swiped card transactions, including sales at self-service terminals but excluding ones at cardholder activated terminals (CATs) or in no-signature required sales, must feature the customer's authentic, legible signature that is identical with the signature on the back of the card used in the transaction.

Contactless Novus credit card processing sales and biometric transactions are considered swiped payments, provided that the latter are not subject to a chargeback to a processor or merchant because the authorization request did not provide CVV data.

In addition to the above requirements, documentation for key-entered transactions needs to include an imprint of the card.

For non-face-to-face transactions, the following information must be included:

A note that the security code was included in the authorization request.
A note that an address verification request was completed.
A note that the processor or retailer obtained a proof of delivery from the courier service that shipped the products as instructed by the customer.

No-signature-required types of card transactions conducted by Novus credit card processing retailers, will not be subject to a dispute for failure to get the customer's signature on the sales Receipt if (a) the magnetic stripe data are transmitted to the acquirer with the authorization request, and (b) the sale's amount is $25.00 or lower.

In response to a ticket retrieval request for some types of payment transactions (for example sales conducted at CATs and Self-Service Terminals), the processor or retailer may provide a substitute transaction documentation that must contain all of the data listed above.

American Credit Card Processing Quick Payment Service

2011-07-19T17:14:00.003-04:00

Quick Payment Service (QPS) is an American credit card processing program offered by MasterCard for facilitating card acceptance in industries that were traditionally cash-based and speed is critical to the sale. Merchant banks take advantage from QPS by offering retailers faster checkout while still supporting card acceptance. QPS transactions are facilitated in a face-to-face setting in which account data are read electronically from the card.

Eligible American credit card processing account users vary by region, but include the following industries:

Transportation - Commuter, Passenger, including Ferries and Bus Lines.
Veterinary Services.
Agricultural Cooperatives.
Horticultural and Landscaping Services.
General Contractors.
Air Conditioning, Heating, and Plumbing Contractors.

Chargeback Protection

The chargeback protection amounts have been set out individually for each industry segment in the QPS program. Those equal to or lower than these amounts can be accepted as QPS transactions through the exceptions provided by the program. Payments above these amounts are facilitated like all other card transactions (in other words, the cardholder signature must be provided and a sales receipt must be printed out).

An adequately identified QPS payment equal to or lower than the applicable chargeback protection amount is insulated against chargebacks under these reason codes:

4801 - Requested Transaction Data Not Received.
4802 - Requested / Required Item Illegible or Missing.
4837 - No Cardholder Authorization.

The chargeback protection amounts for the QPS service are set in the local currency for most countries.

American Credit Card Processing QPS Requirements

Authorization approval is required of all card-read payments.
Merchant account users may elect not to get the customer's signature for adequately identified QPS payments. The personal identification number (PIN) requirements still apply.
Providing a sales receipt to the customer is optional for QPS transactions, however retailers must provide one upon the customer's request.
All POS systems must support electronic data capture.
All American credit card processing providers that elect to participate in the QPS program must operate compliant terminals. The minimal QPS program terminal requirements are as listed below:
- Mag-stripe-read capabilities.
- Mod 10 check digit, validating the account number, and expiration date.
- Automatic online routing for payments.
- Display of authorization code.
- Printing of receipts.
QPS registration is not needed.
The QPS service does not affect interchange fees and rates.

There is no downside in signing up for the QPS service and if you operate in one of the supported industries, you should contact your processor for details.

Merchant Credit Card Account Dynamic Currency Conversion

2011-07-12T15:51:00.004-04:00

Merchant credit card account Dynamic Currency Conversion (DCC) is an add-on service, which is offered by a retailer at the point of sale (POS) either through a third party agent or through its processing bank. DCC offers consumers the choice of paying for merchandise or services in their own country's billing currency, or to do so in the retailer's pricing currency.

In a standard DCC payment, the sale's price is converted from the merchant credit card account holder's pricing currency into some other currency, which is the "transaction currency." This is the consumer's own billing currency. This conversion is done at the checkout, before a payment processing services bank submits the transaction to the issuer for authorization. The sale's amount is based on the stated price in the retailer's pricing currency and converted at a rate that was agreed upon between the retailer and the cardholder, as well as any other charges assessed for currency conversion.

When facilitated correctly, DCC offers transparency for consumers. It enables a customer to see the sale's amount in both his or her own billing currency and the retailer's pricing currency. That way, the consumer knows precisely how much the merchandise or services cost, and is able to make value judgments in a quick and straightforward fashion.

DCC eliminates surprises, as the amount that is agreed to and validated by the consumer using either a PIN or signature at the checkout, is precisely the amount billed on his or her monthly card statement.

Merchant credit card account users that offer DCC to consumers typically have a high percentage of foreign customers - especially those in the travel and entertainment (T&E) industries, as well as at tourist destinations. DCC can also be made available in card-present and card-absent transactions. For both environments, a DCC payment must feature all of the following:

Sale's amount of the merchandise or services sold in the retailer's local currency - including a currency symbol next to the amount.
Currency exchange rate, adding any commission, if available.
Final price in the payment currency, including the words "Transaction Currency" - as well as the currency symbol next to the amount.
A disclaimer statement that:
- is clearly visible to the consumer and
- specifies that the consumer has been given a choice of payment in the merchant credit card account user's local currency, and that the customer understands that the currency choice is final.

Processing Credit Cards at Restaurants

2011-07-06T15:58:00.002-04:00

When it comes to processing credit cards at restaurants, most of your customers are expecting payment flexibility. This is why so many of them accept Visa, MasterCard and the other major brands.

Restaurant managers and personnel also understand the advantages that processing credit cards can bring. Whether it is a full service or a quick service restaurant(QSR), a card swipe at the point-of-sale (POS) terminal can facilitate a faster transaction that is both safe and reliable.

How Processing Credit Cards at Restaurants Is Done

Here are the basic payment processing procedures you need to comply with:

Make sure you return the right bank card to the right consumer. During your establishment's busiest hours, credit card payments can quickly pile up. This is precisely why it is very important to double- and triple-check the card and transaction receipt information to ensure that they match up prior to returning them to the consumer.
Do not assess a penalty charge if a customer does not show if they have made a reservation or for a cancellation without adequate disclosure. If you decide to impose some penalty fee for a cancellation of a reservation, you need to clearly and adequately disclose to the consumer your policy for cancellation. That way you would avoid any possible misunderstandings and possible future disputes.
Take the right action in accordance with the issuer's authorization response, as follows:
- Approved - ask the consumer to sign the transaction receipt and match the signatures.
- Declined - return the card to the consumer and ask for another bank card.
- Call - call your acquirer's authorization center and inform them that you received a "call" response.
- Call Center - be prepared to answer the issuer's questions who may also ask to speak with the consumer.
- Call Issuer - if the transaction is approved, write the authorization response code on the receipt. If it is declined, ask for another bank card.
- Pick Up - retain the card if you can do so by peaceful means.
Compare and match the card number. If your POS device does not ask you to key enter the last four digits of the account number, compare the number on the card to the one shown on the POS device or the receipt. If the numbers are not identical, you may have an invalid card.

Processing credit cards at restaurants is considered lower risk than at many other environments, but this is only the case if you follow industry-approved best practices.

Credit Card Processing Companies Downgrades

2011-06-29T15:54:00.003-04:00

An important issue to understand when examining the merchant account agreement you receive from credit card processing companies is that it rarely involves a single transaction rate. In many of these pricing agreements you will find downgrade provisions, which cover transactions that are processed at a less favorable interchange fees for one reason or other. Much like the headline contracted rate, downgrades are based on the interchange rates published by Visa and MasterCard bi-annually. However, as downgrades are typically not reported in relation to the actual interchange, it is often very difficult to determine the exact reason these transactions were downgraded to begin with.

In many instances, retailers find that the number of downgraded transactions is greater than those falling under the lower, headline rate. While most credit card processing companies will report these downgrades in the monthly statements, they are often described in terms that often unique to the processor and unintelligible to most anyone else, with little indication as to the reason for the downgrade. Downgrades are typically reported as "Non-qualified" and "Mid-qualified."

According to the Visa's and MasterCard's publicly available interchange fee documentation, when a retailer issues a refund, the interchange fee it paid to the card issuer is most often reversed. To put it simply, the card issuers pay the credit card processing companies back. In reality, you only need to review the published interchange fee tables on Visa's and MasterCard's websites to get a better idea of what interchange they must be receiving as a result of the refund.

Despite the Associations' rules, retailers do not always receive the reversed fees. This typically happens because these retailers agree to a bundled discount rate as opposed to an interchange-plus based one.

So where did this refunded fee go? The card issuer returned the interchange to the credit card processing companies, which, at least in this case, did not forward it on to the retailer. It instead kept it as an additional fee. This kind of charge is often considered as a hidden fee. While this may be the case from a visibility point of view, you need to keep in mind that in most cases the retailer agreed to this type of rate when it accepted a discount rate based on gross sales. This practice does not run against the Associations' regulations, although it certainly falls into a gray area. Of course, this part of the discount billing affects only retailers with substantial refund levels or high average transaction amounts.

Credit Card Merchant Account Responding to Copy Requests

2011-06-22T17:23:00.003-04:00

This post will review the credit card merchant account copy request process. When a card issuer submits a copy request to an acquiring bank, the latter has 30 days from the date it gets the request to provide a copy of the transaction receipt back to the issuer. If the acquiring bank sends the request to the payment processing services account holder, it will inform them of the number of days it has to respond. The retailer must follow the acquiring bank's time frame.

Once the credit card merchant account holder is sent a copy request, it should retrieve the associated sales receipt, make a good quality copy of it, and fax, e-mail or mail it to its acquiring bank within the stated time frame. The acquiring bank will then send the copy on to the card issuer, which will, for its part, send it to the requesting customer. The question or problem the cardholder had with the sale is typically resolved at this point.

Additionally, when a retailer sends the copy to the acquiring bank, it should use a delivery method that offers a proof of reception. If it mails the copy, for example,it should be sent registered or certified. If the copy is sent electronically, there will have to be a written record of the transmission.

Copy Requests by Telephone

Every now and then and to assist their cardholders card issuers can call credit card merchant account holder directly to request a copy of a transaction receipt. The retailer is not obligated to comply with such a verbal copy request from a card issuer. Yet, if it decides to send a copy of the receipt, it needs to make sure to save a copy for their own records. The retailer may find they need it for dispute-related or accounting purposes.

Responding to Copy Requests

Responding to copy requests saves retailers time and money. As a credit card merchant account holder, a retailer should always:

Fulfill every copy requests it receives.
Fulfill all requests in a timely fashion.
Make certain that the receipt copy it sends is legible.

A copy request that is not fulfilled or it is, but after the stated time frame, can only be charged back if retrieval request for Reason Code 33 Fraud; otherwise a "true reason" must be submitted. Limiting chargebacks can help retailers improve their customer support and profitability.

Customers must be able to look at their monthly statements and recognize transactions that were done at the retailer's establishment. The acquiring bank needs to make sure it has correct information on the credit card merchant account user's "Doing Business As" (DBA) name, city, and state. The retailer can verify this information by buying an item on their card at each of their locations and looking at the name and location on your their monthly statement. Is the name recognizable? Can the customers correctly identify the transactions done at this establishment?

MasterCard SecureCode Use in E-Commerce Credit Card Processing

2011-06-17T12:29:00.004-04:00

The huge growth of e-commerce credit card processing has spurred security concerns among issuers and cardholders alike. To support the rising need for transaction guarantee and customer authentication, MasterCard SecureCode allows cardholders to authenticate themselves to their card issuers through the use of a pre-selected personal code.

E-Commerce Credit Card Processing Registration

Increasing usage of any new credit card security program is a balancing act between achieving maximum adoption while limiting fraudulent registration. Registration is critical to any authentication solution and requires the customer to opt into the service.

To minimize customer lost at the point of sale (POS), it is recommended that issuers take the following actions:

Communicate constantly to consumers at least 3 months before the launch and through several channels to make sure that the launch of the program is not unexpected and maximizes enrollment.
The e-commerce website should provide easily accessible information concerning the SecureCode platform and the supported authentication options.
The issuer needs to encourage voluntary registration through its web-based banking and other websites.
3-D Secure web pages should be devised to limit customer errors and provide:
- Drop-down fields for customer numerical inputs or display format examples (for example drop-down fields for month and year in dates of birth or card expiration dates).
- Adequate spacing for the authentication element, for input boxes (for example rather than providing a single-input box for phone number, separated into three input boxes).
- Crisp images and help text to indicate card security codes, if used for authentication.
- Short help text via Dynamic HTML, rather than via pop-up, as most pop-up blockers restrict the customer from obtaining data via pop-ups.
- Separate input boxes for customer name inputs from the cardholder such as prefix, first name, middle initial, last name and suffix.
Limit customer questions to less than 4 to fit the Activation During Shopping screen.
Questions could include Address Verification Service (AVS) and/ or card security code, but should not be limited to these:
- Two registration questions that are related to non-card data.
- Questions quickly answered by the genuine customers, but not by a criminal.
- Questions related to previous e-commerce credit card processing data (for example select ZIP code of former address from the following four in a drop-down list).
Consider implementing "Knowledge-based Questions" (could require interface between the issuer's Access Control Server (ACS) and external country specific solutions).
Carefully compare questions for single card numbers that have several cardholders, with answers that relate solely to the primary cardholder.

Merchant Account Services Website Requirements

2011-06-14T16:56:00.003-04:00

Merchant account services providers may recommend or require that retailers include certain content or features on their websites. These features can be intended to offer ease of use for web consumers and reduce customer disputes and possible chargebacks.

Merchant Account Services Website Requirements

Web-based credit card processing account users can be required to add the following elements to their websites:

Complete and detailed description of products and services. Keep in mind that you have a global market, which raises the opportunities for undesired misunderstandings or miscommunications. For instance, if a merchant sells electrical products, be certain to list the voltage requirements, which vary widely around the world.
Customer support contact information including e-mail address and / or telephone number. Web communication may not always be the most cost-efficient or user-friendly one for some customers. Offering a customer support telephone number, in addition an e-mail address, can improve customer satisfaction.
Return, credit, refund, and cancellation policies. These policies must be clearly listed.
Shipping policy. Retailers set their own policies about shipping and delivery of products, that is, if they have any geographic or other restrictions on where or under what conditions they offer delivery. Any restrictions on shipping must be clearly disclosed on the website.
Country of origin. The merchant account services user is required to disclose the permanent address of their location on their website. They should check with their acquiring bank to make certain their disclosure is provided in accordance with all applicable payment card industry regulations and local law.
Export restrictions (if known). If the retailer is aware of any restrictions pertaining to shipping specific items to certain locations, these should be disclosed here.

Best Merchant Account Services Practices for the Web

Recommended best practices for commercial website information include:

Privacy disclosures.
Details on when bank cards are charged. Retailers should not charge the customer until the item has been shipped.
Order fulfillment data. Merchants should provide time frames for order processing and issue an e-mail confirmation and order details within one business day of placing the original order. Offer up-to-date information if an item is back-ordered.
A statement on the website concerning any security controls used to protect customer data.
A statement asking consumers to keep a copy of the transaction receipt.

The merchant account services provider may require that the e-commerce website include any or all of the above elements.

Issues with High Risk Merchant Account Discount Fees

2011-06-09T16:46:00.002-04:00

Understanding a high risk merchant account statement or payment processing services report can be intimidating. There is no unified standard for presenting the many potential fees that can be assessed on retailers. To simplify fee models, many acquirers market a bundled rate in which all applicable fees are rolled together into a single percentage rate, typically known as as a discount. Unfortunately, the discount rate usually hides the real costs of processing.

At their worst, bundled high risk merchant account agreements feature additional fees, which are entirely invisible to the retailer. The purpose of this agreement is to display the potential issues that may arise with such arrangements. Evaluating some typical, processing-related, fee-billing procedures for the two most widely used credit and debit card brands, Visa and MasterCard, we will look at a whole range of issues associated with bundled discount rates versus the available alternative that is the interchange-plus credit card processing fee arrangements.

Many retailers agree to a discount-based arrangement. Here, the high risk merchant account provider charges a percentage of the gross sales. These arrangements can also feature a fixed per-transaction fee for each sale. A retailer, however, cannot know what percentage, or dollar amount for that matter, it is paying to each of the facilitators of the transaction. The biggest portion of the discount is comprised by the fees that processing banks are required to pay the Card Networks and issuing banks to process a retailer's transaction.

For example, the retailer agrees with its acquirer to pay a discount of 2.5 percent, for "Qualified" Visa, MasterCard and Discover transactions. Qualified is typically defined as the best rate a retailer can receive for a transaction. That discount is in fact paid out to three different parties. The biggest percentage, let's say 2 percent, goes to the card issuer to pay for the interchange fee. The acquirer passes this amount to the bank that issued the card used in the transaction.

A smaller percentage of the discount, called the Assessment, currently at 0.11 percent, is passed to the Network 9Visa or MasterCard) whose card is used in the transaction. Then the acquirer retains a percentage (0.39 percent in our example), which is the fee for processing the transaction. Unfortunately, many retailers billed under this agreement see only the discount rate in their processing statements. This is the reason the discount-based pricing makes it very difficult for the high risk merchant account user to know what exactly is being paid to whom and how much they are actually paying for the real costs of processing.

Accept Credit Cards Over the Phone the Right Way

2011-06-06T17:59:00.003-04:00

All merchants are required to perform all of the following actions every time they accept credit cards over the phone.

Gather the Payment Data

Gather all of the following payment information from the consumer:

The card's 16-digit account number.
The consumer's name.
The card's expiration date.
The merchant's name.
A description of the item or service sold.
The entire amount of the payment transaction (adding all applicable taxes and / or gratuity amount).
The payment's date.

Get an Authorization Approval

If retailers accept credit cards over the phone (or online, for that matter), they need to transmit all of the above pieces of information, together with their authorization requests. For delayed shipping sales, the retailer has to get the authorization approval prior to submitting the sales information to the credit card processing companies for the payment at issue. The approval the retailer obtains from the issuer is valid for up to 90 days. The merchant can receive the authorization approval from the issuer using an electronic terminal or a telephone. The issuer will respond with an authorization code, which needs to be placed on the sales receipt, unless the approval was obtained using an electronic machine or a cash register. If the merchant uses an electronic POS machine, it will need to transmit to the card issuer the full contents of the magnetic stripe on the payment card offered for the purchase in each card transaction, as part of each authorization request the retailer submits. If it takes a card for a transaction without first getting the issuer's authorization approval in the manner stated above, the acquirer is not mandated to pay the retailer for the sale's amount, and if the acquirer has at this point paid out the amount, it will most likely charge it back. Even if an authorization approval is granted for any single card sale, this need not be seen as a guarantee that the payment will be received. A card sale can also be subject to a chargeback to the card acceptor for a host of other reasons, as stated in the merchant agreement.

If the issuing bank's electronic authorization process is not available, the transaction floor limit for the time of the system's downtime is typically $150.00 for all bank card transactions for the sale of items for which a customer takes immediate possession. Retailers are not permitted to take advantage of this floor limit's exception to authorize sales that necessitate any delayed shipping of goods: instead, they need to get an approval at the time the issuer's electronic authorization system is available again. The exact date, time and length of the system outage will be notated by the issuing bank. To prevent chargebacks for such unauthorized sales for the duration of a system downtime, the retailer should notate the exact time of the sale in the approval field on the sales slip.

Non Profit Credit Card Processing Considerations

2011-06-01T18:27:00.002-04:00

At the very center of our understanding of the non profit credit card processing cycle lie the following three basic processes:

Transaction authorization. This is a process that takes place at the time when the payment is made. It is the procedure by which a card issuer either approves or rejects a sale paid for with a card.
Authentication process. This procedure achieves the verification of the authenticity of both the consumer and his card. Throughout the authorization procedure, to the maximum extent achievable, the retailer will need to use fraud detection measures and solutions to validate the customer's identity and the one of the card that is being used.
Clearing and settlement of the payment. Once the merchandise or service is shipped or provided to the customer, the online retailer can begin the clearing and settlement of the payment through their processing bank and begin the transfer of funds into the merchant account. Clearing is the process of exchanging payment information between an acquirer and the issuer, while settlement is the exchange of money between the two financial entities. Settlement and clearing happen simultaneously.

Non Profit Credit Card Processing Participants

In addition to the retailer and their customer, a few other parties are involved in an bank card transaction over the internet. Below is a quick overview of the various actors usually involved.

A card issuer is the bank that owns the customer's card account relationship. It issues Visa and / or MasterCard credit and debit cards and contracts with customers for the repayment of purchases.
A cardholder is the valid user of a credit or debit card. In order for a purchase to be made online, the cardholder will have to use a web browser to interact with the online merchant's website.
A merchant bank is a financial entity that supplies organizations with non profit credit card processing capabilities for the acceptance of donations. The merchant bank can also contract with third-party payment providers for the provision of any of these services, which is actually the case much more often. The merchant bank is also known as an acquiring bank.
An online non-profit organization is a valid acceptor of credit and debit cards for donations.
A payment processing company can communicate a transaction through the Associations' (Visa and MasterCard) back-end payment systems for authorization, clearing, and settlement purposes.
Payment gateway is the tool that allows a web-based non profit credit card processing entity to link up to the merchant bank and finalize a card payment.
The Associations provide the platforms that facilitate the electronic communication of all credit and debit card authorizations between issuers and merchant banks and of the settlement of money.

How to Accept Credit Card Transactions

2011-05-30T16:39:00.003-04:00

Merchants are required to accept credit card transactions as payment for products and services sold, or for donations made with all types of bank cards whose brands they have agreed to process at the time they signed an agreement with their processing provider. They are jointly liable for the contractual obligations of their locations under the processing agreement they sign with their processor.

How to Accept Credit Card Transactions

Merchants cannot:

Indicate or suggest that they prefer, directly or indirectly, any brand of payment products over another brand.
Attempt to dissuade cardholders from using a particular card.
Criticize or otherwise mischaracterize a card brand or any of their services or programs.
Attempt to persuade a cardholder to use any type of payment products over another (e.g. cash, check, etc.).
Impose any kinds of restrictions, conditions, disadvantages, charges or fees when a card is accepted that are not imposed the same way on all other types of payment products, with the exception of ACH funds transfer, cash, and checks.
Engage in activities that harm the credit card business or brand.
Promote any given payment product (with the exception of the merchant's own private label card that they issue for use exclusively at their establishments) more actively than the retailer promotes the other brands.

Merchants are allowed to offer rebates from their regular prices for payments made in cash or by ACH funds transfer or by check if they clearly disclose all terms of the offer (that is the regular and lower prices) to consumers and that any rebate offered applies equally to cardholders of all payment products.

Any time payment methods are communicated to consumers, or whenever consumers ask what types of payments are accepted, the retailer must indicate that they accept credit card transactions from all types of cards they honor, according to the specific guidelines of each brand and as prominently and in the same fashion for all payment products.

The retailer must not use the logos of credit card companies in any manner that may injure or diminish the goodwill associated with the particular logo or mark, nor (without explicit prior written consent) indicate that the credit card company endorses the retailer's products or services. The retailer has to only use the logos and marks as is reasonably needed to perform their functions under the merchant agreement and have to cease using them once the agreement is terminated.

How to Accept Credit Cards Online

2011-05-20T18:29:00.002-04:00

Retailers that accept credit cards online must comply with the following requirements:

Protocol for Accepting Credit Cards Online

Each credit card transaction processed online by an e-commerce retailer and submitted to the acquiring bank must comply with the bank's standards, including the ones governing the formatting of data transmission and encryption of information, referred to as "designated protocol". E-commerce merchants must accept credit cards online only when these transactions are encrypted in accordance with this designated protocol, which, in essence, is the Secure Socket Layer (SSL) that adds the "s" in the "https" at the beginning of the e-commerce website's URL. This protocol can change over time, so merchants need to be on alert for notifications from their processors. Retailers cannot accept credit card information by email.

Internet Browser Support for the Designated Protocol

E-commerce merchants cannot accept credit cards online unless the sale is processed over a browser which supports the payment processing companies' designated protocols. However, if the retailer wants to accept a card for payment from a consumer whose browser is not compliant with the applicable designated protocol, the merchant is allowed to process it by other means including by mail, phone or fax.

Information Security

E-commerce retailers are required to store all unencrypted information pertaining to card transactions in a secure fashion. Unencrypted transaction data must not be stored on the retailer's own internet hosting server. The merchant is required, crucially, to immediately notify its acquirer if there is a data breach in its systems and card numbers may have been compromised. If the retailer fails to do so, it may be held responsible for any and all losses sustained as a result of that breach.

Chargeback Rules for Non-compliance

If retailers accept credit cards online in a way that is non-compliant with the processing agreement or respective payment company's requirements, any such transaction can be immediately charged back with the result that a previously paid sale is returned to the merchant for repayment to its acquirer. These returned sales are referred to as "Chargebacks." If a billing error is claimed by a consumer in regards to a particular sale, or if a customer complains to its issuer about the quality of products or services purchased with the card at a merchant's store, retailers are expected in good faith to attempt to resolve the issue with their customer. If the cardholder refuses to pay the issuer for products or services because of the quality dispute, the issuer will probably initiate a chargeback for the sale's amount or the disputed portion of it. If the issuer is involved in a lawsuit with its customer in regards to a card sale completed by the merchant, the latter must cooperate with the issuer and offer any assistance that may be required.

How Is Credit Card Payment Processing Done

2011-05-13T17:37:00.003-04:00

Every time credit card payment processing is done, there is a series of interactions taking place among several participants. In essence, we have three fundamental processes that each transaction goes through:

Authorization is the first stage during which the issuer of the card either authorizes or rejects the particular bank card payment at hand.
The clearing and settlement of a payment are the stages during which the electronic exchange of payments between merchant banks and issuers takes place as shown below:

Payment information is sent from the merchant bank to the issuer of the card for the amount to be posted to the customer's monthly statement.
A payment is then processed from the card issuer's into the merchant bank's account that is to be later charged to the retailer's account.

The following post will examine how card acceptors do their credit card payment processing in both card-present and non-face-to-face settings. Credit card processing events and activities can and do vary slightly for any given retailer, merchant bank, or a card issuer, also making allowances for card types or payment environment and also the payment processing system used.

How Is Credit Card Payment Processing Done: Transaction Authorization

Here is how the authorization process is done:

The consumer presents a card to pay for the merchandise. For card-not-present payments, the consumer provides the merchant with his card number, billing address, expiry date, security code, etc.
The consumer swipes his card, the retailer keys in the payment amount, and submits an authorization request to the merchant bank. For card-not-present transactions, the card number and the other information can be entered on the internet or manually entered.
The merchant (acquiring) bank sends the merchant's authorization request on to Visa or MasterCard (the Card Network).
The Network routes the request on to the issuer of the card.
The issuer then either approves or declines authorization for the payment.
The Network sends the issuer's decision on the authorization to the merchant bank.
The processor sends the issuer's response on to the retailer.
The retailer gets the authorization approval and processes the transaction accordingly.

How Is Credit Card Payment Processing Done: Clearing and Settlement

For transactions where authorization is approved, the process goes on as listed below:

The retailer submits the payment slip with the processing bank.
The processor credits the retailer's account and then presents the transaction to the Network for settlement.
The Network processes the settlement, funds the processing bank and at the same time debits the issuer's account with it. Only at this point does the Network send the sales receipt to the issuer.
The card issuer lists the transaction on its customer's account and sends out the monthly statement.
The consumer receives the statement and submits the payment.

Excessive Chargeback Credit Card Services

2011-05-11T19:47:00.002-04:00

Within thirty days of the end of the 2nd trigger month, and then on a monthly basis from that point on, the credit card services provider is required to submit an individual Excessive Chargeback Merchant (ECM) report for every one of its ECMs (instead of a CMM report) all the way until that particular ECM's chargeback-to-transaction ratio (CTR) falls below 100 basis points (1 percent) for two successive months. The processing bank also is required to submit a copy of the ECM report and all applicable Excessive Chargeback Program (ECP) Standards to the particular ECM merchant. Visa and MasterCard will fine the processor a reporting fee of $300 for each individual ECM report received.

Excessive Chargeback Merchant (ECM) Report Contents

The ECM report needs to include all of the data needed for the CMM report, as well as all of the following additional data:

A detailed description of the credit card services provider's chargeback controls established to monitor the ECM's day-to-day activities.

A detailed examination of the practices that led the ECM to go over the ECP standard rate.

The processor's action plan to get the ECM's CTR back down to acceptable levels.

An electronic file that lists chargeback transaction details for every chargeback processed by the credit card services provider for the ECM in the given month.

Any additional details that Visa and MasterCard may need.

The processor is fined a fee of $300 for each ECM report sent.

Late ECM Report Submission Fees

If the merchant services provider or Visa or MasterCard calculates that a card acceptor is an ECM and the processor fails to send an ECM report in a timely manner, MasterCard or Visa will fine the processor up to $500 per day for every one of the first 15 days that the ECM report is overdue and then up to $1,000 per day from then on until the late ECM report is finally submitted.

Excessive Chargeback Violation Assessments

In addition to any fees assessed for the submission of CMM reports, ECM reports, or any late report receptions, MasterCard and Visa can fine the credit card services provider for the so-called issuer reimbursement fees and for violation assessments for excessive chargeback rates associated with an ECM. MasterCard and Visa apply these fees, which can be quite substantial in every calendar month for which the ECM had a CTR of 100 basis points (1 percent) or higher, counting the two trigger months. To calculate the issuer reimbursement fees and assessments, a credit card services provider may propose an alternative CTR calculation that it believes will more accurately match or link the chargebacks to the applicable sales transactions.

Online Payment Processing Recurring Payments Basics

2011-05-06T12:27:00.002-04:00

In a recurring online payment processing arrangement, a customer pre-authorizes a card acceptor to automatically charge her credit or debit account at a pre-determined interval (that is weekly, monthly, quarterly, or annually).

Most of the time recurring payments are processed smoothly and without any incidents. Yet, recurring billing comes with some unique challenges that are related to changes in the customer-retailer relationship. A customer may cancel the pre-authorization to charge her card account due either to a change in the payment type or the cancellation of a retailer relationship.

It is understood that most retailers quickly process changes to recurring online payment processing billing plans. Yet, if a card acceptor does not process a requested change quickly and accurately, the customer will continue to be billed for the charges and will call her issuing bank to request a chargeback.

The Credit Card Associations have it in their best interest to help issuing, processing bank, as well as card acceptors to keep recurring payment volumes going up and growing, of which everyone benefits. To promote such growth, customers must be ensured that they will not have problems discontinuing any particular recurring online payment processing plan. To ensure this is done, the Associations have designed platforms that offer a systematic way to minimize chargebacks by preventing the processing of unauthorized recurring payments.

The Associations have developed a service to substantially minimize chargebacks resulting from cancelled recurring payment transactions. These services are optional ones that allow participating card issuers to enable recurring payments to be blocked in the MasterCard or Visa credit card processing authorization and clearing systems. Once the Association blocks a given recurring transaction, erroneous payments will not continue to be posted on the customer's monthly credit card statement. In the process, the issuing and processing banks, as well as card acceptors will eliminate the possibility of the occurrence of the costly chargeback process.

The Associations' recurring transaction cancellation platforms utilize the operational support of the MasterCard and Visa payment systems. Issuing banks can initiate an update to the Associations' databases that contain stop transaction information and the identification of the cardholder, card acceptor, and processing bank. Any time a transaction with a recurring payment indicator is processed, the respective payment network will check the database for the stop transaction note, and payments will be declined if a match is discovered.

There is a charge for using the recurring transaction cancellation services that is lower than the fee for the authorization of an unwanted payment and then the processing of the resulting chargeback.

Payment Processing Services Best Practices for Partial Authorizations

2011-05-03T12:40:00.002-04:00

Every time the remaining balance on a debit or prepaid card account is not sufficient to cover the sale's amount, partial authorizations make it possible for payment processing services users to finalize the sale by accepting whatever balance is available on the initially presented card and make up for the balance by accepting an alternative method of payment, such as a check, another card or cash. This kind of payment is called a "split tender" transaction.

If a prepaid bank card that is used also as a gift or a similar type of card, the remaining balance will be displayed by default on the card acceptor's point-of-sale (POS) machine and it can also be printed out on the sales receipt.

How Payment Processing Services Partial Authorizations Work

Following below is a step-by-step depiction of the process of handling a partial authorization request:

The consumer's debit or prepaid bank card's remaining balance is not sufficient to cover the transaction's amount.
The card acceptor submits a payment processing transaction authorization request for the whole payment amount (without adding the tip, however), adding an indicator designating a Partial authorization.
As the insufficient balance is discovered, the issuer issues a partial authorization approval and sends it back to the card acceptor.
The card acceptor's POS machine recognizes the issued response code and deducts the partially approved balance from the whole transaction's amount. If, however, the transaction takes place in a full-service setting, the POS device prints out two separate receipts - one showing the partially approved amount (not adding a tip line, though), and another receipt indicating the balance due and a tip line to display that the amount is yet due.
The consumer now pays the balance amount due of using another method of payment.
The payment is completed and a sales receipt is issued, displaying the split tender amounts. If, as is the case with a Balance Return response code, the remaining card balance is also shown. However, this can be formatted as indicated below to protect consumer privacy:
- If the displayed account balance is lower than $200, the POS machine displays the precise balance and prints it out on the sales receipt (it looks like this: "Balance Remaining: ($83.19").
- If the shown outstanding account balance is in excess of $200, however, the POS machine displays a "Confirmed" message, instead of the due dollar amounts (so it looks like this: "Balance Remaining: Confirmed").

Protect Your Payment Processing Services Account Against Fraud

While you are waiting for the transaction authorization response, you have plenty of time to take a close look at the cards. Any sign of tampering with its security features may be an indication that you have been presented with an invalid or a counterfeit card.

When you get an approval response to your authorization request, but you still suspect that fraud may be taking place, you will be well advised to make a Code 10 call and follow the instructions you receive.

E-Commerce Merchant Processing Services Risk Management

2011-04-28T16:08:00.002-04:00

The e-commerce industry presents incomparable possibilities for tapping into a number of markets that are by default out of the reach of brick-and-mortar types of operations. Web-based retailers have indeed the world as their market.

The other side of the equation is of course that fraudsters see the internet commerce as an additional, and a very lucrative one, source of profit, where they can collect sensitive personal account information that can be then used for processing fraudulent transactions. Personal account data can be compromised or outright stolen in any number of various ways, but e-commerce merchant processing services holders can do their part and assist in the protection of data from falling into the wrong hands.

As a first step in this direction and in order to minimize losses resulting from an outsized risk exposure, web-based card acceptors need to implement internal fraud detection services and controls that are devised to their own setting's specifics. An internal fraud prevention department can suggest the direction that the business needs to take to fight payment processing fraud. Consider incorporating the following measures into your business:

· Set up an official fraud management function. Consider the implementation of the following procedures when setting up a fraud management position or department:

o Promote fraud detection and prevention services to the highest possible priority.

o Devise day-to-day objectives that promote profitability, such as:

§ Limiting the ratio of fraudulent transactions.

§ Decreasing the effects of fraud prevention measures on legitimate orders.

§ Limiting fraud-related chargebacks.

o Clearly outline the responsibilities for detecting and reviewing possibly fraudulent transactions.

o If your business is a larger organization and you need a separate group that deals with chargebacks, you should consider promoting a close cooperation between the fraud prevention and chargeback management groups, as one of the most typical causes for chargebacks is of course fraud.

· Monitor fraud control performance and make adjustments when necessary. Your fraud prevention actions will become much more effective if you monitor areas like:

o Total fraud volumes as a percentage of your total sales volumes.

o Fraud recoveries as a ratio of your total fraud volumes.

o Speed of examining and reaching decisions on suspicious transactions, based on a number of characteristics.

o Number of customer complaints regarding legitimate sales. This is a category you need to pay an especially close attention to. The last thing you want is, by trying to limit fraud, to negatively affect legitimate sales. So keep a close eye on the legitimate complaints an try to keep them to the minimum.

E-Commerce Merchant Account Billing Policy Basics

2011-04-26T15:47:00.002-04:00

E-commerce merchant account users need to design a clear and detailed policy that communicates the terms of their billing process. You need to clearly disclose your billing policy to your website visitors at the time of sale, as well as making it easily accessible for review on your website. Your billing policy needs to communicate the following information:

When your customers' payments will be processed.
How the transaction will be displayed on the cardholders' monthly statements. These disclosures are managed through your e-commerce merchant account's billing descriptor. Usually, it is set up to show your “Doing Business As” (DBA) name. Call your merchant services provider and ensure that it is set up properly. This is particularly important if the business' legal name differs from the DBA name. If this is the case, cardholders can easily get confused, because they may recognize your DBA, while processing banks typically use the legal name in the billing descriptor. If you are working with a third-party billing provider, notify the customers how the payment will be described on their monthly statements (list the third-party billing provider's name and the payment amount).
Ask the customers to store a copy of the payment for their own records.

It is critical that you do not bill your customer's credit card prior to the product being shipped. In an online payment, the transaction date is the one on which the item was shipped, or the service delivered. Consumers today can and do review their transaction activity in practically real time and, if they notice a charge in their activity log without having actually received the merchandise or at least a shipping notification, they will probably contact their card's issuer and dispute the whole transaction.

In case your business sells digital content, your billing policy needs to also conform with the following best practices:

Do not bill your customers' cards before the content is actually downloaded on your website.
Do not use the negative renewal options or other similar marketing techniques that may create the deceptive impression that the item is free.
Keep the transaction's terms and conditions simple and concise and provide to your visitors all applicable restrictions before the order is completed.

In addition, you need to make sure that you provide in your e-commerce merchant account billing policy details about the payment currency that will be utilized to complete the transaction. Keep in mind that websites can be accessed from around the world and, unless you have chosen not to accept international orders, your customers can be located pretty much anywhere. You need to clearly disclose the currency, specifically if it is not unique (for example a dollar may be Australian, New Zealand, Hong Kong or U.S.). Also remember that retailers are not allowed to convert payment amounts into different currencies. You are allowed, however, to provide on your website equivalent amounts in other currencies, if there is a clear disclosure that the conversion is only given for information purposes.

Addressing Payment Processing Chargeback Issues

2011-04-21T19:43:00.002-04:00

However good your chargeback prevention procedures may be, chances are that you will still be receiving a chargeback or two every now and again. When that happens, you need to know how to address them.

First of all, when faced with high rates of chargebacks, it is highly recommended that you closely examine your payment processing procedures and set up a set of best practices to make sure that sales are processed the right way and in a fashion that is compliant with all applicable Visa and MasterCard rules. By instituting these procedures, you will ensure obtaining the best possible processing rates, while at the same time reducing customer disputes and chargeback rates. Ultimately, you will greatly improve your bottom line.

Still, as good as your chargeback prevention procedures are and despite all of the best practices you may have implemented into your sales process, it is inevitable that you will be seeing a chargeback or two finding its way through and around your protective mechanisms. When this happens you need to first try to resolve the problem without losing the sale. Immediately provide to your payment processing bank all available supporting information regarding the transaction at issue or about the shipping, delivery or other issues you might have encountered. Such supporting documentation includes sales receipts, invoices, delivery confirmations, etc.

The chargeback may have been initiated because your customer has not received the item or service on the previously agreed date. You may be able to fix the issue by offering evidence that the item was received within the specified time-frame (this is where the delivery confirmation may come useful), however the customer has not taken into account the weekend days, or something like that. Email or fax this information to your payment processing company as soon as possible. It it is always recommended that you provide as much details, relevant to the issue at hand, as you can get your hands on. Once your merchant services provider has enough evidence to support your case, the payment will be re-presented, through the respective Credit Card Association of Visa or MasterCard, to the credit card's issuer.

The most important factor to consider during the chargeback process is time. You will always have a certain time-frame within which to complete each step of the process. If you do not respond to a particular information request within the specified time-frame, you will lose all of your re-presentment rights and will not be allowed to get your money back. You need to also bear in mind that, if a chargeback cannot be reversed, either because you don't have available supporting evidence to represent or for any other reason, the best course of action will be to accept it and move on, saving your time and money in the process. Think of it as cost of doing business.

How to Accept Online Payments In a Way that Limits Fraud

2011-04-19T16:57:00.002-04:00

If you are reading this blog, you probably already know very well that fraud prevention is a much bigger concern when processing non-face-to-face payments as the process is quite different from the one for payments involving merchants operating in a non-face-to-face environment. Because online payment processing is by default performed over the web, the card acceptor never really sees and examines either the card or its cardholder.

On the bright side, however, there are quite a few solutions and best practices which, if performed for each transactions and implemented consistently, will help mail order and telephone order (MO / TO) and web-based card acceptors limit fraud and maximize their bottom lines.

How to Accept Online Payments In a Way that Limits Fraud

Card acceptors doing their online payment processing in a card-not-present environment, incorporate the following suggestions into your payment processing cycle for each of your transactions:

Get an authorization approval for all payments. The floor limit for all card-not-present transactions is inevitably zero and all that means is that card acceptors always ask for and actually receive an authorization approval for each payment, regardless of the payment amount.
Get the expiration date of the card. You need to always ask consumers to provide their card's expiration date. It serves as another way to verify that the consumer is in a physical possession of their card during the time of the payment.
Get the security code of the card. Card security codes are, as you no doubt know, the three- (for Discover, MasterCard and Visa bank cards) and the four-digit (for AmEx cards) codes on the back (for MasterCard, Discover and Visa bank cards) or the front of the bank card (for AmEx). Getting the security code of the card in none-face-to-face payments is a crucial way to validate that the customer is in actual physical possession of his card. Remember that you should never store the security codes of the cards anywhere in your database. This storage is prohibited by Visa and MasterCard and violators, when caught, will be charged with substantial fines.
Use the AVS (Address Verification Service) system. The (AVS) allows web-based merchants to validate the correctness of the billing address that the customer has listed at the checkout. It does that by routing the provided address, through Visa and MasterCard, to the card's issuer. The card issuer receives the information and matches it to what it has on file for its own customer and returns a response code that gives the result of its validation process.

Using these fraud prevention tools and procedures will help reduce fraud and limit chargebacks. Your online payment processing provider should always be available to help you implement these suggestions and offer others.

Credit Card Services with AVS

2011-04-15T18:47:00.002-04:00

Address Verification Service (AVS) is the most widely used fraud prevention solution for allowing businesses to do their credit card services in a way that enables them to verify the billing address given them by their customer by matching it to the one on file with the issuer.

Credit Card Services with AVS

Using the AVS is quite straightforward, after your merchant account provider has set up the service for you. Here is a step-by-step guide:

Ask that the customer for her billing address.
Submit the address, along with the other payment information to your acquirer for an authorization decision.
The address will now be routed on to the card issuer for verification.
The issuing bank compares the address to the one in its files for its customer.
The issuer sends back the response to the merchant.

AVS and payment authorization requests are issued at the same time, although by different systems, and, within only a few seconds, the retailer receives the two results.

AVS Results and What to Make of Them

AVS Results	What to Make of It
X - Exact Match	The address and the nine-digit ZIP match. In this instance, and if all other fraud results are negative, go ahead and process the payment.
Y - Match	The address and the five-digit ZIP match. In this instance just follow the above recommendations.
A - Partial Match	The addresses are the same, but the ZIP codes are not. This is a strong sign of a possible fraud. In this instance you may have to do some additional investigation in order to reach a decision.
Z - Partial Match	The ZIP codes are the same, but the addresses are not. This is a good sign of a possible fraud, so you have to follow the above recommendations.
N - No Match	The addresses do not match, nor do the ZIP codes. This is a good sign of possible fraud. You will have to take additional verification steps.
U - Unavailable	The issuer's system is not working right now so the address can't be verified. In this instance you will need to base your decision on other criteria.
R - Retry	The issuer's server is temporarily not responding. Just try again an hour later.
U - no AVS Support	The issuing bank does not support AVS, so you will need to decide on whether or not to process the payment based on other criteria.
G - Global	The address is not in the U.S. and you can't use the AVS service. You will need to use other services to validate the legitimacy of the payment, provided you do accept payments from abroad in the first place.

If the payment is authorized, the Response Code is "U") and the transaction is charged back to you, the acquirer can re-present again and you will not be held responsible, because all U.S. issuers are required to support AVS by industry regulations.

Basics You Need to Know about Payment Gateways

2011-04-13T12:31:00.002-04:00

An incessant stream of inquiries coming into our email boxes and through information forms over the past several months have finally convinced me that I need to do another take on the very basic details that need to be known about payment gateways. This post will do just that and explain exactly what gateways are and do and will also go over the e-commerce payment process.

Payment Gateway Definition

At its basic level, the payment gateway is a service that web-based merchants use to transmit payment information from their websites to their processing banks. To put it in another way, the gateway is the web equivalent of the physical point-of-sale (POS) machine that is used by brick-and-mortar retailers in face-to-face payment acceptance settings. The transaction data are encrypted for protection against hacker attacks before transmittal.

Payment Gateway's Role in the Payment Process

Payment gateways take a place between the e-commerce website's shopping cart (the place customers manage the items they are interested in purchasing) and the processor's back-end payment system. The transaction process goes through the following stages:

The consumer places her order on the e-commerce website and provides her card account information details.
All transaction details (i.e. credit card number, name, payment amount, etc.) are encrypted through the secure socket layer (SSL) that is built into the website and sent on to the merchant's server.
The payment gateway collects the transaction information, encrypts it again through another SSL certificate and sends it on to the merchant account processor's back-end server.
The processor now routes the data on to Visa or MasterCard. If the consumer has used a Discover or an AmEx card, the process is somewhat different, as the issuer is in this case also the processing bank. So what happens is that Discover and AmEx make a decision on what kind of authorization response to give and then send their response back to the merchant.
Visa or MasterCard sends the transaction information to the card issuer for an authorization decision.
The issuer either approves authorization of the transaction or declines it and routes it back to the processor. The response codes for declined transactions also provide information on the reason the payment did not get authorized.
The processing bank sends its response code (again through the payment gateway) to the e-commerce website and the decision is displayed in the visitor's browser.

The e-commerce transaction process may look somewhat complicated, but when taken in its entirety, from submitting the payment details to receiving the authorization response code, only takes a few seconds.

Online Credit Card Payment Processing Guidelines

2011-04-06T17:25:00.002-04:00

If a merchant wants to be able to process credit card payments, it needs an e-commerce website with these features implemented:

An already built website with installed SSL certificate to encrypt transaction data.
A set up shopping cart that is the tool that enables website visitors to gather and organize the items they are considering to purchase.
Payment gateway service that is the e-commerce version of the credit card processing terminal that facilitates the transmittal of information between the website and the acquiring bank, quickly and securely.

The first two features may be provided by your web developer. The payment gateway service can be provided and set up for the card acceptor by its credit card processing provider that it will choose to work with.

The merchant must not agree to paying anything until it actually begins its online credit card payment processing activity on its website. The single biggest consideration, however, as far as processing rates and fees go, should be the bank card rates. The merchant needs to carefully examine the pricing agreements it has been sent, prior to making any decision on which acquiring bank to select.

I would definitely suggest that the card acceptor requests and evaluates pricing schedules from at least a dozen merchant account providers. The cost of online credit card payment processing services are a sum of multiple individual components and the card acceptor needs to understand exactly how much it will be assessed for each one of them.

Here is a breakdown for you of the most typical charges associated with web-based payment processing:

Discount - these are the fees a merchant is charged for accepting electronic payments. The discount is the sum of a percentage charge (for example 2.09%) and a fixed per-item charge (for example $0.25).
Per-authorization fee - paid on a "per-item" basis, the authorization charge should not be any more than 13 cents for any type of processing account.
Application and account set up fees - both of these fees are one-time charges that must not be accepted!
Monthly statement fee - as its name suggests, this charge is applied on a monthly basis and must not be exceeding $19.
Customer support fee - another monthly fee that you should not be agreeing to.
Gateway fee - a charge that is specific to the web-based payment acceptance industry and is applied on a monthly basis. This charge must not exceed $14.99.

If your examination uncovers any other charges or fees in your pricing schedule, you should simply walk away and look for a processing provider elsewhere. Be advised that there are thousands of them, so you should have no trouble finding one. Moreover, some of them may be able to give you a line-by-line comparison of their competitors' pricing models.

Flat Rate Merchant Account Cost Considerations

2011-04-01T16:57:00.004-04:00

Cost is inescapably the single biggest factor weighing on merchants' minds when they are making decisions about credit card processing services. I know you can relate to that, as pricing is no doubt the first consideration most of us have in mind when making any kind of buying decisions of our own. Only if we like what we see there, do we move on to examining the other features.

This fact has of course been well known to us for quite a long time and we have been trying our best to design a pricing model that is at the same time not complicated, so that users can quickly understand how it functions and low-cost, so that it does save money for those signing up for our services. That is not easily achieved, but at long last we have designed our flat rate merchant account model. Now, this is not to say that our other existing models are not user-friendly. They are, it is just that the new one is much better. Much like a 2011 model car is better than a 2005 one.

What Makes Flat Rate Merchant Account Pricing Better?

The flat rate merchant account pricing structure is both very cost efficient and it is actually as predictable, as far as cost is concerned, as one could make it, for the simple reason that it has just one single rate for all kinds of cards, including regular consumer, business-to-business, purchase, rewards, etc., and transaction settings.

So our merchants know in advance exactly what processing rate any one transaction will be given. For the very same reason a user cannot overpay. I mean, if you were aware what the price would be and agreed to it, you can't really overpay for a purchase,can you?

How to Estimate the Cost

We always ask businesses who contact us to do a simple calculation to estimate how much we would have charged them for their processing and then compare it to their existing provider's costs. Here is how this is done:

Assume that your transaction processing volume for April was $150,000 on 1,500 transactions and that your flat rate was at 2.20% + $0.30 per transaction.
Then your total processing cost with us would have been ($150,000 x 2.20%) + (1,500 x $0.30) = $3,300 + $450= $3,750.
Your effective processing rate for April would have been ($3,750 / $150,000) x 100 = 2.50%.

Now calculate your total costs for April and compare the sum to the above total. It is really that simple!

Considerations for E-Commerce Credit Card Merchant Services Fees

2011-03-29T18:52:00.003-04:00

What are acceptable rates you should agree to pay for your credit card merchant services? This is of course the most common question we are asked by businesses looking for processing services. Then we also get asked why card-not-present rates are higher than face-to-face rates. In this post I will explain the reason for it the discrepancy and will give you a template on the fees you should agree to be paying.

Why Are E-Commerce Processing Fees Higher?

This one is simple. E-commerce transactions are more expensive, because historically they have produced much more customer disputes than transactions processed by brick-and-mortar businesses. Disputes are a problem in themselves, however, to make matters worse, they often deteriorate into the even more unpalatable chargebacks, which are the biggest reason why Visa and MasterCard suspend merchant account services.

The Issue with Chargebacks

The problem with chargebacks is that, if their rate jumps above 1 percent of your total transaction count, your credit card processing service will be suspended one of the Credit Card Association, if at all it comes to that. What I mean is that your acquirer will be the one to suspend your account way before the rate comes anywhere close to 1%. Why? Because acquirers also get fined by the Associations quite steep penalties for any of their merchants whose chargeback rate exceeds this threshold and they won't accept that.

E-Commerce Rate Suggestions

So what should you pay for your w-commerce merchant account? Here are my suggestions:

Discount. E-commerce transaction processing rates should never exceed 2.11 percent for credit cards and 1.88 percent for debit cards. These rates, however, will be for the so-called "regular cards." There are other types like rewards, commercial, purchase, etc., that are usually processed at considerably higher rates. However, the type of pricing model you have set up by your processing bank will have much to do with the concrete rates you get. Some models, for instance, will give you one rate for both debit and credit cards. The problem with this type of model is that the interchange rates for the various debit cards are much lower than the ones for credit cards. What you should take of that is that such models will have you overpay. A considerably better model would be one based on the interchange-plus pricing structure, which provides for your acquirer's fee is directly added to the interchange fees set by the Associations. While you don't have control over what the Association charge, you can ensure that your processor charges the same for all transactions.
Transaction charges. Transaction fees at $0.30 per item should be acceptable.
Application processing and set-up fees. Do not agree to any such fees!
Payment gateway fees. Payment gateways are virtual tools used to connect shopping carts of online stores with the acquirer's payment systems and communicate information back and forth between the two of them. For instance, the most widely used gateway is Authorize.Net. A set-up fee of under $100 should be considered acceptable and a monthly fee of $10 is also OK.
Monthly statement fee. This one is known by any number of names, but in any case it shouldn't be in excess of $20 per month.
PCI compliance fee. This one is a new fee, charged either on a monthly or yearly basis. Whatever the calculation, the fee should remain below $150 a year.

Finally, evaluate each pricing proposal you receive as a whole, not by looking at its components separately.

How to Take Credit Cards when the Card is Unreadable

2011-03-25T17:33:00.002-04:00

Do you know the experience? You swipe your card through the machine at the register and it gives you an error. You do it again, but you get another error. It can be frustrating, but it does not have to be. If the merchant knows what they are doing, the situation should be handled quickly and painlessly.

So first of all you need to understand that a face-to-face setting does not always translate into card-present transactions. In this post I will go over the reasons why this is so and will show you how to take credit cards every time this happens in a way that will be satisfactory to both you and your customer.

Issues with Card Readability

First of all, why would a card be unreadable? 99% of the time the reason is one of the following:

The credit card terminal is damaged.
The card is damaged, most often its mag stripe is demagnetized. This could be totally accidental, but it could also be caused the card being counterfeit or somehow altered.
The card is not swiped incorrectly.

What Should You Do When the Card Is Unreadable?

When, for whatever reason, the card is unreadable, you need to follow these procedures:

Examine the credit card terminal to make certain it is working correctly.
Verify that your customer is swiping the card correctly.
If there is no issue with either of the above items, examine the card itself to verify that it is valid and has not been damaged in any way.
If it turns out that the issue is with the card itself, you have several options. Whatever you choose these procedures to be, write them down and train your staff. You could request another card or a different payment form. You could, on the other hand, manually enter the payment data. You could also request a voice authorization approval for the transaction.
If you choose to be implementing one of the last two options in the preceding item, you will also need to take an impression of the front of the credit card, to be placed on the transaction receipt or on a separate receipt, which will have to be signed by your customer. The impression of the card could then be needed in chargeback disputes.

Before you decide on your procedures for handling unreadable cards, you need to know that when you accept credit cards that are not swiped, they will be processed at card-not-present rates. Simple as that and there is nothing you can do about it, even though you had the card in your hands.

Credit Card Processing Guidelines for Cruise Lines

2011-03-21T18:17:00.002-04:00

Cruise line businesses are considered exceptionally high-risk by Visa and MasterCard and consequently are required to implement specific credit card processing practices that are often quite different from the ones followed by most other types of businesses that take credit cards in lower-risk types of settings.

To remain in compliance with Visa and MasterCard rules and to keep your customers satisfied with your services, you need to follow these procedures:

Request an authorization approval for any additional fees that were not initially authorized. To obtain the transaction authorization approval for the additional amount, follow these guidelines:
1. Follow your regular authorization process.
2. If the issuer declines the additional authorization request, call your customer and request an additional method of payment, like a check or another card.
If the issuer declines authorization for the additional amount, settle only the initially approved amount. More particularly, you will need to:
1. Request settlement of the amount that is already authorized, leaving out any of the additional charges, for which the issuer has not given authorization.
2. Contact your customer and request a different form of payment for the declined amount.
Whenever the originally authorized amount is greater than the actual cost of the cruise, submit an authorization reversal for the balance. You can't charge your customer for any amount above the actual cost of the services he used, even if the amount was authorized.
Implement the final authorization rule and the 15 percent rule. At the check out at the end of the cruise, an authorization approval is required in the following situations:
1. If, for some reason or other, an authorization approval was not initially obtained. I don't need to elaborate on this requirement, other than to say that you should avoid such circumstances.
2. You were given an authorization approval initially, but the eventual transaction amount is greater than the initially authorized one. In such instances you will have to use the 15 percent rule to estimate whether or not another authorization approval is necessary. Following is a step-by-step guide on how you can to do this:
  1. Begin by adding 15 percent to the initially authorized amount.
  2. Then compare the total received above to the actual transaction amount.
  3. If the actual amount of your service is greater than the total you calculated, you will have to receive an additional authorization approval for the balance.
Obtain approval to the terms and conditions of the sale from your customer. It is essential that your customers are given access to all terms and conditions of the service, prior to the reservation. More to the point, the following details will have to be disclosed and accepted:
1. The sale's amount, including all applicable fees.
2. How any additional fees will be disclosed on the cardholder's monthly card statement and when they will be assessed.
3. The way your business name will be shown on your customer's statement.

Interchange-Plus Pricing Model for Credit Card Processing

2011-03-17T19:31:00.004-04:00

We have just introduced a new model to our rapidly expanding line-up of pricing structures, based on the interchange-plus type of models and I wanted to share my views about it. The new pricing model is available to both commercial and non-profit organizations that do their credit card processing in card-present as well as card-not-present environment.

Why Did We Design It?

Most merchants name pricing as the single most important factor they use when selecting a merchant services provider. It is totally understandable, as many of us have done precisely the same when we have selected service providers for whatever we may have needed. Nonetheless, offering low pricing is the only way we can be competitive nowadays and it is the reason why we have launched an interchange-plus credit card processing structure.

How Does It Work?

Our interchange-plus credit card processing model works by adding our mark-up to whatever the interchange fee may be (it is set by Visa and MasterCard for each type of card transaction). By making sure that the mark-up is as low as possible, UniBul guarantees that the business is given the lowest possible processing rate.

UniBul Merchant Services' new pricing structure assesses no fixed monthly fees.

Rates and Fees

Here is a list of all applicable rates and fees:

Application - $0.
Payment account set-up - $0.
Terminal set-up or reprogramming - $0.
Payment gateway set-up - $0.
Payment gateway monthly fee - $0.
Monthly maintenance service - $0.
UniBul's discount rate – 0.25% + $0.15 above interchange cost.

The card acceptor's ultimate processing rate is the sum of the processor's (e.g. UniBul Merchant Services) fees and whatever Visa or MasterCard charge. With the interchange-plus model, the fee the processor charges is precisely the same for all credit and debit card types, which ensures that the business does not overpay for any transactions that may otherwise have been labelled as "mid-" or "non-qualified." The total processing fee varies by transaction, as the fees charged by Visa and MasterCard vary by card type.

Interchange-Plus Credit Card Processing Pricing Model Benefits

Among the benefits of the new pricing model are:

Merchant approval rate at 98% of qualified applicants.
No teaser rates, no hidden fees - all charges are fully disclosed in our pricing agreement.
Application decision as soon as within hours of submission.
Processing of all American and the major European and Asian credit and debit card brands.
Wide range of third party non-cash payment services to accommodate customers who cannot use cards.
Consolidated, automatic daily ACH deposits for all payment types directly into your bank account.
Sales reports, trend analyses, chargeback management and much more online with our client center.
Round-the-clock US-based merchant support.

Unacceptable Businesses for Merchant Credit Card Processing

2011-03-15T16:20:00.003-04:00

Businesses and non-profit organizations operating in some types of industries are unqualified to set up merchant credit card processing services in the U.S. Others are severely restricted, but allowed, provided they manage to produce a string of documents and have an acceptable credit profile. The criteria are set by the individual credit card services providers, according to guidelines set out by the Credit Card Networks of Visa and MasterCard. These "black lists" are not set in stone. Rather, they are regularly updated with the inclusion or exclusion of certain business types.

Yet, there are some permanent features of these lists and some industries are unlikely to ever leave them. Mostly the determination of which industry should fall in there is based on the legality of the provided services and the probability of generating unacceptably high levels of chargebacks. The first criterion is self explanatory. As far as the other is concerned, historical data clearly indicate that some industries have simply been unable to cope with chargeback risk.

I should also mention that, even when the merchant credit card processing account is set up, the business' chargeback levels are monitored by the processor on a monthly basis and, if they go over 1% of the total transaction count in any individual month, the merchant will be categorized as high-chargeback one and subjected to very heavy additional requirements. Organizations that are not able to fix their chargeback problem within three months will lose their payment accounts altogether.

Following is a list of business types which will fall into credit the non-qualified merchant credit card processing services category for most merchant account providers.

Advanced payments greater than 1 year for any product or service.
Any adult products and services, including but not limited to phone sex, web-based sexually oriented chat, images via the internet, sexually oriented dating services, companion and escort services, prostitution, adult toys, bookstores, strip clubs and other miscellaneous adult entertainment, services or products.
Bidding fee auctions.
Cash advances.

Chain letters.

Charities without evidence or proof of 501( C ) (3) status.

Check cashing establishments.

Collection agencies or firms involved in recovering / collecting past due receivables.

Credit card protection or identity theft service.

Credit repair or restoration.

Cruise lines.

Currency exchanges.

Debt consolidation or reduction services.

Drug paraphernalia of any form.

Essay mills and paper mills.

Extended warranty companies.

Foreclosure protection and guarantees.

Government grants

How-to books, newsletter, subscription or on line access for any industry shown in the unqualified list.

How to Accept Credit Cards at Hotels

2011-03-11T18:43:00.003-05:00

If you own or manage a hotel or another lodging type of business, you will have to accept credit cards in a way slightly different from other businesses. In this article I will offer you a set of best practices to build your payment processing procedures:

Get an incremental authorization approval if the hotel stay has been extended by your customer or if additional charges have been incurred. If incremental charges have been incurred, you will need to obtain an authorization approval only for the additional transaction amount that are expected be generated by the extension or by the additional charges. To do this:
1. Follow your regular transaction authorization process for obtain an approval for the additional amount.
2. In case your authorization request is rejected, do not proceed with the payment and instead request from the customer an alternative payment method for the additional amount.
Only submit for settlement the approved authorization amount if your authorization request for the incremental charges was rejected. You should:
1. Only settle the already authorized amount and do not include any amount for which authorization was rejected.
2. Contact your customer and request an alternative payment method for the rejected incremental amount.
Process an authorization reversal if the initially authorized amount exceeds the actual cost of the hotel stay. If this is the case, you will have to process an authorization reversal request for the difference between the authorization amount and the actual hotel booking agreement.
Use the final authorization and the 15% rules. At the checkout, authorization approval is required when:
1. There was no original authorization. If this is the case, authorize the total amount.
2. There was an initial authorization, but the final amount exceeds it. In this case, apply the 15% rule to estimate whether or not an additional authorization is necessary. Here is how to do this:
  1. Add 15 percent to the originally authorized amount.
  2. Compare the calculated total to the actual transaction amount.
  3. If the total amount exceeds the total, request an authorization for the difference between the initial authorization and the final transaction amounts.
Disclose and request acceptance of all terms and conditions of the sale. You must tell your customers what the terms and conditions of the sale are before they book a hotel room. In particular, you should disclose the following details:
1. Your cancellation policy.
2. Whether a "no-show" fee will be added to the total amount or billed separately.
3. When the "no show" fee will be charged.
4. How your name will appear on the cardholder's credit card statement.
The disclosure of the above information will improve the quality of your service and help minimize customer inquiries and disputes which will inevitably minimize chargebacks.

You should require that your customers accept your terms and conditions by clicking on an "Accept" or "Agree" button for the disclosure statement on your website.

Virtual Terminal Payment Processing Facts

2011-03-08T17:59:00.005-05:00

Having recently reviewed Authorize.Net, the world's most widely used payment gateway, I thought I should do the same for virtual terminal, which is the primary tool for direct marketers and all other businesses accepting payments over the phone or in the mail. Of course, it is a service that comes as part of each major payment gateway's package, Authorize.Net very much included.

The Virtual Terminal Basics

Virtual terminal is a web-based platform used by MO / TO businesses and non-profit organizations to access their merchant processing services provider's payment system and manually enter transaction information. It works very much like the online payment tools run by utilities, telecoms and other service providers that allow customers to pay their bills online. You have no doubt made such payments. The difference of course is that the virtual terminal enables you to enter your customers' account information, not your own.

Payment Types Supported by Virtual Terminals

All virtual terminals support credit and debit cards, so that is a given. Additionally, just as your cell phone provider allows you to make payments by online checks, so do some virtual terminals. Yet, not all of them support this option, so if you need ACH acceptance, you will have to explicitly verify that with your prospective processor.

Customer Profile Management Features

Some virtual terminals can enable you to set up and manage recurring and installment payment plans, where customer accounts are charged at pre-defined intervals and for pre-defined amounts. This billing is done through managed billing and customer profile management add-on services. The customer profile management allows you to save your customers' credit card account information on your processor's server. The managed billing service then allows you to access the stored customer profiles and manage various operations, including processing regular payments, setting-up recurring, deferred and installment payments, etc. Such features are mostly needed by merchants selling subscriptions, insurance packages, and other services and merchandise that are provided over time.

Pricing Guidelines

When it comes to pricing, your virtual terminal's will be similar, if not identical, to what you'd be paying for a payment gateway. Still, you may be able to get it cheaper at some providers. Then again, if you get a payment gateway, you will also get a virtual terminal by default, so keep that in mind.

Having said that, let me give you some pricing guidelines. First of all, there may be a set-up fee, but you should be able to get a service set up for free. Then you should not be paying a monthly fee in excess of $10.00. Thirdly, there will be a per-transaction authorization fee, which should not be in excess of $0.10. Then you will have the merchant account fees.

Basic Facts About Authorize.Net

2011-03-04T19:56:00.002-05:00

Our clients are predominently e-commerce and MO / TO businesses and we are constantly answering inquiries about payment gateways and virtual terminals. To be sure, our free Authorize.Net merchant account is a quite substantial reason for all this interest. But we also learn a lot from these inquiries and the biggest lesson so far has been that there is quite a bit of confusion about what a payment gateway does in the credit card processing chain. In this post I will attempt to disspell at least some of that misunderstanding.

How Does Authorize.Net Compares to a Physical Terminal?

So a payment gateway is a service for collecting and securely transmitting payment information, which is the function also performed by the point of sale (POS) credit card machine. Authorize.Net serves as the link between your e-commerce merchant account and the processor who established it and manages it for you.

As it is to be expected, there are quite a few differences between the functions performed by a POS machine and Authorize.Net and the most conspicuous one is that the former collects the payment data directly from the customer's bank card by "reading" the its magnetic stripe. The gateway, in contrast, collects the information that the customer has manually inputed into the checkout's payment form. Yet, this is actually just a minor technical detail.

Once the information is gathered, both Authorize.Net and the credit card machine encrypt it before transmitting it to the merchant services provider for protection against cyber criminals. The processor then communicates the payment data to the card issuer, who either approves or declines the payment and routes its response back to the merchant through the same channel.

How Much Should You Pay for Authorize.Net?

This is the number one question we get, by far. OK, even though all payment gateways at the end perform the same functions, there can be substantial differences in their pricing. Authorize.Net usually costs roughly $20 per month, but some providers may charge you $10 or less. You may also be charged a set-up fee of up to $100 and there will most likely be a per-transaction authorization fee, usually of $0.10 per transaction.

It is essential that you understand that the payment gateway fees are quite separate from the merchant services fees. To help you understand why this is the case, I will use the POS machine analogy again. You may be charged a monthly fee for the terminal, especially if it has some fancy features for accounting integration or for managing inventory. When looking into pricing proposals, you need to evaluate the whole package, including the merchant services rates and fees. You cannot afford to allow yourself to be blinded by impossibly low headline rates. As usual, if it looks too good to be true, it always is. Authorize.Net and payment processing are certainly no exception to this rule.

Store Card

2010-01-13T20:06:00.002-05:00

Store card is a payment card associated with a particular retailer or group of retail stores that can be used only for purchases from that retailer or group of stores.

Self-Service Terminal

2010-01-13T20:04:00.001-05:00

Self-service terminal is a customer activated terminal, especially one including the functions both of delivering and paying for goods (for example, in an automatic fuel vending system).

Retail Sale Transaction

2010-01-13T20:01:00.002-05:00

Retail sale transaction is the purchase of goods, services, or both, generally at a merchant establishment.

Retail Banking

2010-01-13T19:58:00.000-05:00

Retail Banking is the part of a bank's operations providing services at its branches for small or individual account holders.

Refund

2010-01-13T19:54:00.001-05:00

Refund is the opposite of a purchase transaction, namely, the cardholder returns goods to the merchant and is credited for their value. Positive interchange and merchant service charge are reversed.

Recurring Payments

2010-01-13T19:49:00.001-05:00

Recurring payments are payments by an issuer to an acquirer on behalf of a cardholder who authorizes a merchant to bill the cardholder's account on a recurring basis (such as monthly or quarterly). The amount of each payment may be the same or may fluctuate.

Quick Payment Service (QPS)

2010-01-13T19:39:00.000-05:00

Quick Payment Service (QPS) is a MasterCard program targeting cash and convenience-oriented merchant segments, for example, fast food chains, movie theaters, and parking lots.

Purchase

2010-01-07T18:51:00.002-05:00

In the credit card industry, purchase is a financial transaction, if approved, in which funds are debited from an issuer and credited to an acquirer in payment for goods or services.

Proprietary Card

2009-12-31T19:08:00.001-05:00

Proprietary card is a type of card that financial institutions or other organizations issue using the logo of the issuer instead of a national service mark or logo (such as MasterCard or Visa). A proprietary card allows the cardholder to access a credit or deposit account using ATM or POS terminals.

Promotion Code

2009-12-26T13:28:00.001-05:00

Promotion code is a code assigned by the card issuer to identify transactions that apply to a promotional program run by the issuer to encourage card use.

Processing Fee

2009-12-14T19:45:00.001-05:00

Processing fee is a compensation paid by card issuers or acquirers to a financial network organization for processing interchange transactions according to the business agreements established by that financial network. Fees are determined by each transaction type for issuers and acquirers participating within each individual financial network.

Prepaid Card

2009-12-08T16:23:00.002-05:00

Prepaid card is a card that stores value and is used instead of cash to pay for a single service, such as pay telephones or public transportation. It cannot be reloaded and is a throw-away or collector card.

Point-of-Sale System

2009-12-04T19:32:00.001-05:00

Point-of-sale system is an electronic system that accepts financial data at or near a retail location and transmits that data to a computer or authorization network for reporting activity, authorization, and transaction logging.

Point of Interaction (POI)

2009-12-02T18:01:00.001-05:00

Point of Interaction (POI) is the location where a transaction occurs (also known as point of sale or point of service).

Personal Identification Number (PIN)

2009-11-28T19:58:00.001-05:00

Personal Identification Number (PIN) is a four- to 12-character alphanumeric code that enables a card issuer to authenticate the cardholder to approve an ATM or terminal transaction occurring at a point-of-sale (POS) terminal.

Online Operating Mode

2009-11-23T19:07:00.002-05:00

Online operating mode is an operating mode in which a card acceptance device is connected to a central computer system and has access to the database for authorization, inquiry, and file changes. Live files are accessed for each transaction. For authorization, an operating mode in which member banks are directly connected to the card network via a MIP or their host computer. Live files are accessed for each transaction.

Offline Operating Mode

2009-11-20T18:12:00.003-05:00

Offline operating mode is an operating mode in which a card acceptance device is not connected to a central computer source. Responses are governed by the parameters or guidelines set within the terminal or supporting device as defined by the card issuer. The accessibility of information is not in a live environment, meaning that current active files are not being viewed during the time the transaction is conducted.

Merchant ID Number

2009-11-16T16:56:00.000-05:00

Merchant ID number is unique number assigned by the acquirer to identify the merchant.

Merchant Authorization

2009-11-10T12:58:00.000-05:00

Merchant authorization is the sales validation for the merchant, by telephone or authorization terminal, to guarantee payment to the merchant.

MasterCard SecureCode

2009-11-03T11:21:00.001-05:00

MasterCard SecureCode is a program supporting cardholder authentication and guaranteed payments over the internet for MasterCard and Maestro transactions.

MasterCard Payment Gateway (MPG)

2009-10-19T17:36:00.001-04:00

MasterCard Payment Gateway (MPG) is a gateway hosted by MasterCard and used for routing and settling commercial electronic payments between buyers and suppliers.

Interchange Program

2009-10-12T11:51:00.001-04:00

Interchange program is a program that reimburses card issuers for specific costs related to an incoming interchange transaction. These costs include processing costs, financial carrying costs, and risk costs. Interchange fees are payable to the card issuer by the acquiring bank.

Interchange Fee

2009-10-06T12:31:00.001-04:00

Interchange fee is a fee applied to an interchange transaction, applicable to the two members of the Credit Card Associations of Visa and MasterCard participating in the transaction as card issuer and acquirer.

Interchange

2009-09-11T11:29:00.002-04:00

Interchange is the exchange of transaction data between acquirers and card issuers.

In-Flight Commerce

2009-09-10T17:01:00.001-04:00

In-flight commerce are transactions such as shopping or gaming activity that a cardholder initiates during a flight. In MasterCard applications, these transaction types also are referred to as Cardholder- Activated Terminal (CAT) Level 4.

Independent Sales Organization (ISO)

2009-09-09T15:16:00.001-04:00

Independent Sales Organization (ISO) is is an outside company (not a MasterCard or Visa member) that is contracted by a member bank (each member bank may be a member of Visa or MasterCard, or both) to provide services other than transaction and cardholder processing to the member. Such services include, but are not limited to, merchant solicitation, cardholder solicitation, customer service, and ATM deployment.

Guest Folio

2009-09-08T17:21:00.001-04:00

Guest folio is a lodging merchant's guest record that contains the cardholder's transaction information, including check-in and departure dates, rate, anticipated length of stay at check-in time, applicable charges, and taxes. The check-in date and the dated amount and authorization approval code of each authorization must be included on the folio if not on the sales draft.

Guaranteed Reservation

2009-09-04T16:50:00.003-04:00

Guaranteed reservation is the use of a card account number to reserve accommodations at lodging merchants. For the cardholder, such reservations include a late arrival provision, penalties if cancellation rules are not met, and a provision for unavailable rooms upon arrival.

Fraudulent Merchant

2009-09-03T18:02:00.001-04:00

Fraudulent merchant is a retailer, or any other person, firm, or corporation that agrees to accept credit cards, debit cards, or both, and engages in an unauthorized transaction occurring on any of the cards.

First Chargeback

2009-09-02T16:53:00.001-04:00

First chargeback is a procedure in which a card issuer charges all or part of the amount of an interchange transaction back to the acquiring bank.

Financial Institution

2009-08-31T16:55:00.001-04:00

Financial institution is any commercial bank, federal or state savings and loan association, federal or state savings bank, or credit union.

Emergency Card Replacement Service (ECR Service)

2009-08-28T16:57:00.000-04:00

Emergency Card Replacement Service (ECR Service) is the MasterCard worldwide service designed to provide temporary cards to all MasterCard cardholders that do not have their cards in their possession. This card is issued to a cardholder that needs a temporary replacement card sooner than the typical five to 10 days that it takes to get a permanent card.

Electronic Point of Sale

2009-08-27T16:44:00.001-04:00

Electronic point of sale is a point-of-sale merchant equipped with electronic equipment for pricing and recording transactions, but not necessarily incorporating functions for electronic funds transfer (EFT).

Electronic Funds Transfer System (EFTS)

2009-08-26T16:48:00.001-04:00

Electronic Funds Transfer System (EFTS) is an electronically based system designed to eliminate the paper instruments that are normally associated with fund movement. For example, a cash withdrawal from an ATM that eliminates the check.

Electronic Funds Transfer (EFT)

2009-08-25T18:16:00.001-04:00

Electronic funds transfer (EFT) is a paperless transfer of funds initiated from a terminal, computer, telephone instrument, or magnetic tape.

Electronic Draft Capture (EDC)

2009-08-20T16:58:00.001-04:00

Electronic draft capture (EDC) is a system in which the transaction data is electronically captured at the merchant location for authorization and clearing processing.

Electronic Commerce

2009-08-18T16:27:00.001-04:00

Electronic commerce is the exchange of goods and services for payment between the cardholder and merchant when the transaction is performed (completely or partially) via electronic communication.

eCommerce Transaction

2009-08-17T17:14:00.001-04:00

ECommerce transaction is a non-face-to-face payment for goods or services by use of electronic media over a public network (such as the internet) or private network (such as an extranet).

Debit Transaction

2009-08-14T16:45:00.001-04:00

Debit transaction is a transaction initiated when a card is presented as payment for goods and services or at an ATM for cash withdrawals. The transaction amount is automatically deducted from the cardholder's checking or other bank account.

Debit Card

2009-08-13T16:26:00.001-04:00

Debit card is a plastic card used to initiate a debit transaction. In general, these transactions are used primarily to purchase goods and services and to obtain cash, for which the cardholder's checking account is debited by the card issuer.

Cross-Border Transaction

2009-08-12T17:41:00.001-04:00

Cross-border transaction is any transaction on a payment card in which the country code of the merchant differs from the country code of the cardholder.

Credit Loss

2009-08-11T16:52:00.001-04:00

Credit loss is the amount lost (charged off) as a result of failure of the cardholder to pay the amount owed on the account.

Credit Card

2009-08-06T17:28:00.000-04:00

Credit card is a plastic card bearing an account number assigned to a cardholder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a cardholder is subsequently billed by the card issuer for repayment of the credit extended at once or on an installment basis.

Co-Branded Card

2009-08-05T15:59:00.001-04:00

Co-branded card is a card issued by a member bank in association with a commercial company, typically bearing the brand of both.

Clearing

2009-08-04T17:41:00.001-04:00

Clearing is the process of exchanging financial transaction details between an acquiring bank and a card issuer to facilitate posting of a cardholder's account and reconciliation of a customer's settlement position.

Cirrus

2009-08-02T10:29:00.000-04:00

Cirrus System Incorporated, a wholly owned subsidiary of MasterCard International Incorporated, operates the international ATM sharing association known as the "MasterCard®ATM network," accepting MasterCard, Maestro®, and Cirrus®brands.

Chargeback Process

2009-08-01T11:35:00.002-04:00

Chargeback process is a dispute resolution process that member banks use to determine the responsible party in a chargeback related dispute. This process has three cycles in which the member banks can resolve the dispute themselves. If the members do not resolve the case within three cycles, they must send the case to arbitration. These three cycles are:

First chargeback (submitted by the card issuer).
Second presentment (submitted by the acquiring bank).
Arbitration chargeback (submitted by the card issuer).

Card Payment System

2009-07-31T11:54:00.001-04:00

Card payment system is a payment system supporting payments made by financial transaction cards.

Card Account

2009-07-30T12:13:00.002-04:00

Card account is a credit line for deposit facility accessed by a card issued to a cardholder that enables the cardholder to purchase goods and services or obtain cash.

Card Acceptor Business Code (MCC)

2009-07-25T13:23:00.001-04:00

Card acceptor business code (MCC) is a numerical representation of the type of business in which the card acceptor (merchant) engages. Formerly merchant category code (MCC).

Card Acceptor

2009-07-18T13:32:00.000-04:00

Card acceptor is a merchant or an Automatic Teller Machine (ATM) that accepts a card and presents transaction data to an acquiring bank.

Call Referral

2009-07-11T18:45:00.001-04:00

Call referral is a generic term for the "refer to card issuer" authorization response. A call referral indicates that the acquiring bank or merchant must contact the card issuer for further instructions. The card issuer uses the call referral as a fraud prevention tool when it suspects or is attempting to prevent fraud at the point of sale. See also referral call.

Brand Mark or Mark

2009-07-04T17:17:00.001-04:00

Brand mark or mark is the proprietary combination of names, symbols, and colors that visually conveys a brand's identity and personality.

Batch Processing

2009-06-27T13:57:00.001-04:00

Batch processing is a type of data processing operation and data communications transmission where related transactions are grouped together and transmitted for processing, usually by the same computer and under the same application. It is generally regarded as non–real-time data traffic comprising large files, as a type of data traffic where response time is not critical.

Bankcard

2009-06-20T14:51:00.001-04:00

Bankcard is a payment card issued by a bank or other financial institution, such as a MasterCard or Visa card.

Bank Identification Number (BIN)

2009-06-13T13:44:00.000-04:00

Bank Identification Number (BIN) is a unique six-digit number assigned by the Credit Card Associations to identify acquiring banks.

Automated Fuel Dispenser (AFD)

2009-06-07T11:29:00.000-04:00

Automated fuel dispenser (AFD) is a terminal device used to accept payment for fuel at a petroleum service station.

Automated Clearing House System (ACH)

2009-05-30T12:46:00.000-04:00

Automated Clearing House System (ACH) is one of the group of processing institutions that have networked together to exchange (clear and settle) electronic transactions.

Authorization Response

2009-05-24T12:01:00.001-04:00

Authorization response is an answer to an authorization request, typically a code, that advises the acquiring bank or merchant how to proceed with the transaction.

Authorization Message

2009-05-16T13:42:00.001-04:00

Within a payment system, any message between a card acceptor and a card issuer serving to establish whether the card issuer approves for a transaction to proceed, is called an authorization message.

Authorization Code

2009-05-09T15:16:00.001-04:00

Authorization code is six-digit alphanumeric code assigned by the card issuer to identify the approval for a specific authorization request. Also referred to as "issuer's response code," "authorization approval code," or "authorization response code."

Authentication

2009-04-19T13:30:00.001-04:00

Authentication is the process of ensuring that both the card and cardholder are genuine, before a payment transaction is completed.

Affiliate Member

2009-04-12T10:37:00.001-04:00

Affiliate member is a type of MasterCard or Visa member that participates indirectly through an association member or a principal member in the activities of this corporation (for example, by issuing MasterCard or Visa cards or by accepting transaction records from merchants).

Account Data Compromise Event

2009-03-28T12:47:00.001-04:00

Account data compromise event is an event in which account data may have been compromised that could lead to unauthorized use of the cardholder's account. An account data compromise event does not mean that account data was wrongfully disclosed or used, but that account data may have been wrongfully disclosed or used.

Voice Authorization Center

2009-03-21T18:56:00.001-04:00

Voice authorization center is an operator-staffed center that handles telephone authorization requests from merchants who do not have electronic point of sale (POS) terminals or whose electronic terminals are temporarily not working, or for transactions where special assistance is required. Voice authorization centers also handle manual authorization requests and Code 10 calls.

Voice Authorization

2009-03-14T12:19:00.001-04:00

Voice authorization is an authorization obtained by calling a voice authorization center.

VisaNet Processor

2009-03-07T12:52:00.001-05:00

VisaNet processor is a processor directly connected to VisaNet. See also: Processor.