Currently when the magnetic stripe fails during a face-to-face transaction, the merchant key enters the account number and must manually imprint the card to prove the card was present during the transaction for protection against fraud chargebacks. Effective for new transactions processed on or after October 15, 2011, merchants may include Card Verification Value 2 (CVV2) in the authorization request for Visa U.S. Domestic key entered face-to-face transactions when the magnetic stripe cannot be read by the terminal.
In order to qualify for chargeback protection against reason code 81 “Fraud-Card Present” the transaction must meet the following criteria:

• Authorization Approval
• U.S. Domestic Transaction
• Card Present with magnetic stripe failure only
• Transaction was keyed entered
• CVV2 was included in the authorization request
• Signature obtained on the sales draft and retrieval request properly fulfilled

The following transaction types are excluded from the chargeback protection:

• Quasi Cash
• Cash Back
• Manual Cash Disbursement
• Betting, including lottery tickets
• Casino Gaming Chips
• Off-Track Betting and Wagers at a Race Track
• Visa International transactions

These merchants must continue to obtain an imprint of the card when the magnetic stripe cannot be read by the terminal for the protection against fraud chargebacks.

Have you ever needed to check if a credit or debit card is valid, but you don’t want to authorize or charge yet? We’ve added a new feature for our CenPOS Virtual Terminal called Positive Card. CenPOS will go out to the networks with a zero authorization amount to validate the card with the issuer prior to being stored.

REVIEW OF ENCRYPTED PAYMENT STORAGE OPTIONS NOW AVAILABLE:
Positive Card- validates card. Merchant validate CVV, address and zip code passes fraud check and decide whether the answers are acceptable before storing. Why would you accept a card if it doesn’t pass everything? Only Canada and the UK participate in AVS check; If you know your customer, you may wish to allow the card anyway. This feature allows you to enter a card, then make an educated decision as to whether you want to store it for recurring billing.
Repeat Sale- Offered for check/ACH and credit/debit. Process a transaction and it creates a new token to use for future sales transactions. CVV not allowed per PCI Compliance. Later, check the Token Box, enter the Token ID, amount and invoice #. That’s it.
Recurring Payments Module: Offered for check/ACH and credit/debit. Set up client contracts and store multiple cards, payors, and payment methods for a single account. Regardless of where a token was issued (resale, recurring, positive etc) the token is the same for all.
Securely store any payment type for variable amount token billing or fixed recurring billing.

FAQ:
How do I get this feature? Administrators login to the Virtual Terminal and turn on for each user you want to have access. (This also applies to the other options.)
Will this also validate checks? No, It resides in the credit/debit. If you have a need, let us know.
Are there fees? Yes. 6/14/11 MasterCard charges $.03 for this service, effective with their announcement to support zero auth address verification (AVS), card verification code 2 (CVC 2) validation or both. Expect similar fees on all networks now or in the future. Standard CenPOS per transaction fees apply.
Can we use tokens for the EBPP/ E-invoice service? Not yet, but it’s in development. Currently customers will click the email and enter payment information for each invoice.

The tools are in place for you to eliminate faxed authorization forms that expose payment data and reduce PCI Compliance scope. If you need help using the features or how to deliver the token approval form for signature to your clients, please do not hesitate to call.

Visa is announcing plans to accelerate the migration to contact chip and contactless EMV chip technology in
the U.S. The adoption of dual-interface chip technology will help prepare the U.S. payment infrastructure for the
arrival of Near Field Communication (NFC)-based mobile payments by building the necessary infrastructure to
accept and process chip transactions.

Not only will chip technology accelerate mobile innovations, it is also expected to enhance payment security
through the use of dynamic authentication. Chip technology greatly reduces a criminal’s ability to use stolen
payment card data by introducing dynamic values for each transaction. Even if payment card data is
compromised, a counterfeit card would be unusable at the point of sale (POS) without the presence of the
card’s unique elements. By eliminating static authentication, we reduce the value of stolen cardholder data,
benefiting all stakeholders.

Visa’s plan includes merchant incentives to upgrade to EMV chip-enabled terminals, requirements for acquirer
processors to support chip acceptance and the introduction of U.S. liability shift policies.

Specifically, Visa will waive Payment Card Industry Data Security Standard (PCI DSS) compliance validation
requirements to encourage merchant investment in contact and contactless chip payment terminals. Visa will
also require acquirer processors to ensure that their systems support dynamic data acceptance (i.e., chip) and
will institute a domestic and cross-border counterfeit liability shift.

Visa’s Counterfeit Liability Shift Policies

Visa intends to institute a liability shift in the U.S. for domestic and cross-border counterfeit transactions
effective 1 October 2015. Visa’s global POS counterfeit liability shift policies are designed to encourage EMV
chip card issuance and acceptance in participating geographical regions, effectively creating a more secure
environment for transactions within and between each participating Visa region. Note: The liability shift
encourages chip transactions because any chip-on-chip transaction (i.e., a chip card read by a chip terminal)
provides dynamic authentication data, which helps to better protect all parties.

With this type of liability shift, the party that is the cause of a chip-on-chip transaction not occurring (i.e., either
the issuer or the merchant’s acquirer) will be financially liable for any resulting card-present counterfeit fraud
losses. When a transaction occurs using chip technology, any liability for counterfeit fraud, though unlikely,
would follow current Visa Operating Regulations.

The policy assigns liability for counterfeit fraud to the party that has not made the investment in EMV chip cards
(issuers) or terminals (merchants’ acquirers). The policy encourages wider deployment of EMV cards and
terminals.

EMV chip implementation is accelerating globally. Today, excluding the U.S., 44 percent of all cards are EMV
chip cards, and 74 percent of all terminals are EMV chip-capable, with 62 percent of cross-border transactions
conducted with a chip card at a chip terminal.

U.S. Participation Introduced in Global Counterfeit Liability Shift Policy

Visa plans that effective 1 October 2015, the U.S. will be included in the Global POS Liability Shift Policy, which
will apply to all issuers and merchants’ acquirers in the U.S., with the exception of transactions at Automated
Fuel Dispensers (AFDs). Transactions made at AFDs will be excluded from the liability shift for a period of two
(2) years due to the challenges faced by the petroleum industry in upgrading terminals to accept EMV chip
cards. Similarly, effective 1 October 2017, transactions made at AFD terminals will be included in the Global
POS Liability Shift Policy.

Note: This liability shift policy change excludes counterfeit fraud at U.S. ATMs. Visa will continue to evaluate
the potential for an expansion to include ATMs.

Preparing for Payment Technology Evolution

As the U.S. point-of-sale payment infrastructure continues to evolve from the static magnetic stripe to intelligent
devices such as EMV chip cards and Near Field Communication (NFC) mobile phones, this liability shift policy
change will help ensure that the acceptance infrastructure is ready. It will also allow acquirers, merchants and
issuers to invest in new technology to ensure that cardholders can continue to make secure and frictionless
transactions across all channels.

Results from the 2010 LexisNexis True Cost of Fraud study show that 20% of merchant fraud losses are attributed to friendly fraud, 42% to lost or stolen merchandise, 18% to identity fraud, and 20% to  fraudulent requests for a return/refund. Friendly fraud occurs when a consumer purchases an item online and receives the product but claims not to have received it, requesting a refund
or chargeback from the merchant or delivery of a duplicate item.

Prevention holds the greatest impact in minimizing fraud losses.

Fraud Loss by Company Size, Product Type, Channel and Industry, 2010 Company Size

For the complete study, get it free by registering at the Lexis Nexus web site:  2010 LexisNexis True Cost of Fraud.

Comments:

Friendly fraud- A small business owner was able to successfully defend against consumer claim that box was delivered empty by showing Fedex records of the weight. The difficulty with this going forward is that new rules have a 180 day chargeback period. Make sure your shipping company keeps those records for as long as you need them.

Identity fraud- Unless there is an issue of verifying ownership, such as when a customer is picking up a car left for repair, merchants cannot ask for a drivers license or other identification for a standard transaction. However, there are many other ways to prevent this type of crime. In the brick and mortar world, a mandatory check for the last 4 digits is a simple and effective way to block cloned credit cards. Due to the global nature of our society, requiring the zip code would frequently result in too many declines. However, you can add additional filters with our payment processing platform that sits in front of your existing processor. Essentially it is your fraud protection dashboard where you control in real-time the level of risk you’re will to accept either by blocking specific transactions entirely, or by sending automated email alerts to managers who then can assess the situation. This works very similar for online transactions.