Now 2013, some merchants are experiencing issues related to the revised MasterCard and Discover 2010 Prepaid and Debit Card Requirements, particularly partial auth reversals. One reason is that some transactions received a partial approval. A partial approval occurs when a Gift Card is used (Visa/MC/AMEX prepaid cards) that have a lower balance that the requested authorization amount;  the processor approves the transaction for the amount that is left on the card. The merchant then must collect the balance with an alternative payment source such as cash or another card.

The 3 critical points of the rules change (from MasterCard):

• Partial Approvals—Merchants can systemically conduct split-tender purchases by allowing debit card issuers (including prepaid) to systemically approve a portion of the original transaction amount in the authorization request when the transaction amount exceeds the funds available on the card. The merchant can then systemically initiate split-tender processing and obtain the remainder of the purchase amount in another form of payment.
• Balance Response—Prepaid issuers can transmit account balance information in an authorization response, cardholders will attempt fewer purchases that exceed their available balances, leading to fewer declines at the POS.
• Authorization Reversal—Authorization reversals will free up debit cardholders’ open to buy amounts by reducing issuer holds on available balances when transactions were not completed, therefore reducing the declines at the POS and the amount of cardholder complaints that are unpleasant for all parties involved.

At the time the rules were created, technology within various points of the payment processing ecosystem could not support the new requirement. Payment gateway and processor issues have largely been resolved at this point, but partial authorizations may still be troublesome in certain environments. For example, an ecommerce site or POS software solution may not have the logic to accept an alternate payment source. If you have an issue, the simplest immediate solution is to contact your credit cart processor and ask them to turn off partial authorizations on your merchant account.  That’s the quick fix, however, if the rules apply to your business, you may need to update your payment technology to comply. Refer to page 299 in the MasterCard Rules, updated December 2012, for more information on Full and Partial Approvals and Account Balance Responses.

About Christine Speedy, blog author. Christine is an authorized sales agent for CenPOS, a cloud payment processing suite of solutions that creates numerous efficiencies for merchants. The CenPOS point of sale, mobile app, and other solutions support partial authorizations and authorization reversals.  CenPOS Global Sales: Christine Speedy (954) 942-0483.

Level 1, Level 2 and level 3 data are general descriptors for the type of information required to qualify for interchange rates applicable to business, corporate, and purchasing cards. Level 3 data can reduce costs over 1%.  This article focuses on business to business, card not present transactions.  (Petroleum, Airlines, T&E and other industries have unique rules and rates, but similar concepts.)

Although interchange fees are the non-negotiable fees all merchants pay, they can be influenced.

EXAMPLES OF FEE DIFFERENCES FOR THE SAME MASTERCARD

example 1

• Commercial Standard: Business World Elite: 3.17% + $0.10
• Commercial Data Rate I: Business World Elite: 2.87% + $0.10
• Commercial Data Rate II: Business World Elite: 2.42% + $0.10
• Commercial Data Rate III: Business World Elite: 2.02% + $0.10

example 2

• Commercial Standard: Purchasing: 2.95% + $0.10
• Commercial Data Rate I: Purchasing: 2.65% + $0.10
• Commercial Data Rate II: Purchasing: 2.10% + $0.10
• Commercial Data Rate III: Purchasing: 1.90% + $0.10
• Commercial Large Ticket I, II, or III Purchasing: 1.35% + $40.00

EXAMPLES OF FEE DIFFERENCES FOR THE SAME VISA CARD

• Commercial Card Standard:  Corporate: 2.95% + $0.10
• Commercial Card Level II: Corporate: 2.05% + $0.05 (and Business Enhanced, Signature Business, Corporate, and Purchasing Cards)
• Commercial Level III: 1.95% + $0.10 ( U.S. Issued Purchasing, including GSA Purchasing and Corporate Cards.)

What is level 2 data?

Level II Data includes the entry of customer code, card acceptor type, tax ID and sales tax.

• For MasterCard, a sales tax amount is required, and the amount must be greater than $0.00, but no less than 0.1% – 30 % of the transaction amount.
• For Visa, a tax amount is not required, but the merchant must indicate whether the transaction is tax exempt.

What is level 3 data?

Level III Data includes Level II data, line item detail and additional data. MasterCard does NOT require a sales tax amount to qualify for level 3 interchange rates.
Level III Summary Data is required to qualify for the related Level III interchange rate. It includes Customer Code, VAT tax amount/rate, Ship to/from Zip code, Destination country code, Invoice number, Order date, Invoice Discount, Freight Shipping Amount, and Duty amount.
If you’re a CenPOS customer, when creating a template, select Level III Light to send only these items that are required.
Level III Full data is not required to qualify for the level III interchange rate, however, particularly if you have GSA contracts, your customers may require you to provide it.
Level III Data Full also includes line items with the Product Code, Commodity Code, Descriptor, Unit of measure, Unit Cost, Quantity, Item Discount, and Total. Some purchasers may want Full Level III Data so they can see these items appear on their statement.

Visa Purchasing Card Requirements

No outside agent, including automated technology, can create data on behalf of the merchant to submit with a transaction to qualify for level 3 interchange rates.

EDITORS NOTES: Some of the biggest level 3 processing technology companies request merchants submit level 3 data, but do not send the same data; the software replaces it behind the scenes. Caution, the merchant is liable for all fees and fines if transactions qualified for interchange rates that the merchant was not eligible for because of improper representment.

How our application creates efficiencies:

• Merchants are only prompted for level 3 data on cards that qualify for it. Others prompt for every card because they have no intelligence.
• Only merchant data is submitted; it is never replaced, in compliance with all guidelines.
• Prompts users for required information automatically, and will not let them bypass unless you make it optional
• “Light” option available if your customers don’t require line item detail.
• Templates help save time
• SaaS- merchants are never out of date and are not required to install software on local computers

For more information on level III credit card processing solutions, contact Christine Speedy.

No. Our hosted payment processing platform is NOT in a cloud. On the surface there are similarities, but the reason not to use a cloud is to control the integrity of the entire system from security to reliability. Amazon’s cloud failure, now impacting businesses for the second day, is the perfect example of why we will not use cloud computing for payment processing related services.

In cloud computing, the user’s computer may contain almost no software or data (perhaps a minimal operating system and web browser only), serving as little more than a display terminal for processes occurring on a network of computers far away.

In our hosted payments solution, the user’s computer will only need a small bit of software if using a signature capture terminal. All users connect to the platform via a web browser (except mobile). Like cloud computing, the merchant is accessing the power of remote software via the internet. But that’s where the similarity stops. With a triple redundant set-up, each PCI Compliant data center can operate completely independent and all are ‘hot’, meaning each are updated in real-time to mirror each other. All of the equipment is owned, not shared. This maxmimizes control over every aspect of system reliability.

The complete current Official Visa chargeback rules and reason codes are available for PDF download. A few of the most common codes are listed here as well.

Visa Chargeback Reason Code 60: Request Copy Illegible or Invalid

EDITORS NOTE: This is a tough one for most retailers to defend because they cannot go back in their files and find the receipt, or they have a copy on carbonless paper that has also become illigible with age.  Our CenPOS technology solution with signature capture retrieval provides instant access to the records you need to defend this type of chargeback. Additionally, with right processing solution, you can also manage all chargebacks from a simple control panel.

Reason Code 75: Cardholder Does Not Recognize Transaction

A lot of times this results from a dba name not being on the record.

Reason Code 57: Fraudulent Multiple Transactions

This chargeback does not apply to recurring payments or to mail order, telephone order, or Internet transactions.

Cashier mistakes are a common cause. Again, this can be eliminated with CenPOS technology for larger operations.

Chargeback Reason Code 81: Fraudulent Transaction Card-Present Environment

You can easily defend this with a signed receipt. Again, CenPOS payment processing platform with Signature Capture puts signed receipts at your fingertips.

Rules for Visa Merchants and chargeback reason codes

The official Mastercard chargeback reason codes as of May 2009 are available in PDF form. Some excerpts of the more common codes and their reasons follow:

chargeback Reason Code 4801 Requested Transaction Data Not Received

Proper Use of Message Reason Code 4801
The issuer may charge back the amount of the requested item using message reason code 4801 if it did not receive an original, substitute draft, or copy of  a transaction information document (TID) within 30 calendar days following  the Central Site Business Date of the Retrieval Request/1644-603 message. … For example, if a cardholder requested a copy of the transaction information document for his or her records…

Chargeback Message Reason Code 4808 Requested/Required Authorization Not Obtained

The issuer may charge back a transaction under this message reason code if
one of the following circumstances occurs:
-The transaction was face-to-face, card-read or key-entered, occurred at a location with a POS device that had both online and magnetic stripe-read capability, and was not authorized.
- The transaction was non face-to-face and was not authorized.
- The transaction amount exceeded the floor limit established by MasterCard in effect at the time of purchase, and was not authorized.
-The authorization request was declined, even if the transaction was below the card acceptors floor limit.
- Technical fallback and CVM fallback transactions that were not authorized.

Chargeback Message Reason Code 4840—Fraudulent Processing of Transactions
This message reason code can be used if the cardholder states in a letter that:
- The cardholder or anyone authorized by the cardholder was still in possession and control of all valid cards at the time of the transaction, and
- The cardholder admits to at least one legitimate face-to-face transaction on Oct 2008 the same card at a given card acceptor location, but denies making one or more additional face-to-face transactions at that same card acceptor location. The chargeback must reflect the entire amount of the transaction in question.

EDITORS NOTE: Our CenPOS technology solution is available for pennies per transaction for retail stores. The signature capture retrieval provides instant access to the records you need to defend this type of chargeback if the consumer actually made all the charges. Additionally, with right processing solution, you can also manage all chargebacks from a simple control panel.

Chargeback Message Reason Code 4841Cancelled Recurring Transaction
-The card acceptor continued to bill a cardholder for a recurring transaction, such as bimonthly, monthly, and semiannual billings of insurance premium, computer service, or a book-of-the-month club, after receiving notification of cancellation from the cardholder or issuer.

Chargeback Message Reason Code 4842 Late Presentment
- More than seven calendar days after the transaction date and the transaction
was completed with electronically recorded card information (whether
card-read or key-entered); or
- More than 30 calendar days after the transaction date, and…

official Mastercard chargeback reason codes (link to MasterCard) See link under popular downloads for the latest release.

EDITORS NOTE: You can reduce chargebacks caused by fraud with full PCI Compliance, signature capture and additional anti-fraud protection both at the cashier level and with special online protections. If you have too many chargebacks that you feel were avoidable, please contact us for further consulting. The right tools make chargeback prevention and management much simpler. These range from free to pennies per transaction.

Least cost routing in the payment processing world is processing any given type of payment via the route that will result in the lowest cost to the merchant. CenPOS is least cost routing solution. It’s an intelligent technology that essentially examines input, makes a multitude of decisions,  and sends back specific information to the POS terminal whether it be a signature capture or virtual terminal. This happens faster than traditional desktop credit card processing terminals. The cashier and consumer don’t have to think, they will be prompted if they need to enter a pin number, just sign, or something else.

CenPOS least cost routing works with checks, credit cards, debit cards, p-cards, and other electronic payment options.

The first reaction from many merchants is, “It sounds great, and I want it, but can I afford this?”.  Direct cash payback for merchants that would benefit most is anywhere from 30 days to a year. If you are processing a million dollars a month in credit and debit cards, you can’t afford not to have CenPOS which provides a huge array of benefits beyond direct ROI, including PCI Compliance and anti-fraud protection.

Prepaid cards issued by banks and other government-regulated organizations are a new way for consumers to make payments and conduct other financial transactions. There are plenty of situations where a prepaid card might be the most convenient choice, but be sure you understand the key terms and conditions BEFORE you buy. Ask these questions when you are considering a prepaid card:

* What are the possible fees associated with using the card?
* Where can the card be used (online, at ATMs, outside the U.S.)?

Reputable distributors of prepaid cards will give you the terms and conditions in writing or have them available on their website. If you don’t understand how your card works, ask for help where you purchased it, from your employer (if it’s a payroll card), or by contacting the customer service number on the card.

Payroll and General Purpose Spending Cards

Payroll and General Purpose Spending Cards can be very useful for those who want to budget their money and for those who don’t have a checking account or credit card.

General Purpose Spending Cards, which may be purchased by consumers, typically charge a monthly maintenance fee and could charge additional fees for adding funds to the card and/or making purchases or getting cash.

Payroll Cards are similar to General Purpose Spending Cards except that they are provided by employers in place of paychecks. Payroll Cards typically allow a certain number of ATM withdrawals without charge to the cardholder and usually do not assess fees for purchases.

While the federal government does not guarantee the same protections for all prepaid cards, many “branded” cards voluntarily carry protections that are the same as credit and debit cards. Cards with a major credit card brand logo provide consumer protections, such as replacing lost or stolen cards and re-crediting money after unauthorized use of the card. To obtain these benefits, you must follow the instructions for registering and activating your card. Be sure to record your card information, including the customer service telephone number on the back of the card, so you can get a replacement if yours is lost or stolen.

If you have a problem with a prepaid card, first contact the customer service number. If the problem still isn’t resolved, you may want to file a complaint with the proper authorities:

* For cards issued by retailers, contact the FTC. You may also file a complaint with your local consumer protection office.
* For cards issued by national banks, contact the Comptroller of the Currency.

Pin debit refers to a credit card transaction in which the buyer enters their 4 digit personal identification number (PIN) into a merchant terminal in lieu of a signature, when using a debit card.

Debit cards are usually associated with a checking account, but may also be a savings account. Regardless of the account, the card will ALWAYS have the DEBIT symbol on the front of the card. Newer cards usually have a holographic Debit symbol.

With PIN DEBIT the merchant pays a fee to the debit network instead of Visa & MasterCard interchange. This fee is under $1.00 per transaction, usually around $0.50 and the fees vary by debit network.

With SIGNATURE DEBIT, Visa & MasterCard have different interchange rates for debit card usage. With very few exceptions, such as processing greater than $420 million annually in debit or for supermarkets, the lowest rate for debit card interchange, which all payment processors pass on to merchants, is 1.03% plus $0.15 per transaction. More details are available by checking the latest interchange rates.

Pin-based debit transaction merchant fees include:
1. Per transaction charge from your Credit Card Processing services company.
2. Debit network charge (Debit Network Acquirer Fee). This fee varies depending upon your region of the country and the network that the cardmember’s issuing bank belongs to. The region determines which debit network the individual transaction will clear through.

Debit network acquirer fee examples:
Interlink Retail $0.175 + .75% (max of $0.525)
NYCE Retail Std $0.1375 + .65% (max of $0.6875)
Pulse (Includes Tyme) 0.16 + .65% (max of $0.71)
STAR (Includes MAC, Cash Station & Honor) $0.1625 + .65% (max of $0.6425)

Pin debit is best used if your average transaction is over $25. That’s generally a good break even point as to whether it’s cheaper to process via pin debit or signature debit.