Point of Sale for Heavy Equipment Rentals – Credit Card Processing Rules Changes 2017

Heavy equipment rental companies and dealers must make changes to comply with new Visa credit card acceptance rules. The sweeping changes to rental industry card acceptance rules were announced in October 2016, with April and October 2017 mandates for compliance.  The changes are complex and require cloud technology to automate compliance. Countertop terminals are not capable of compliance, and must be replaced.

fd130 emv terminal

Countertop terminals such as the FD130 and the Verifone VX520 are not capable of compliance for heavy equipment rentals, and must be replaced.

Visa rules changes include:

  • Defining who initiated the transaction (customer self-pay or merchant)
  • Transaction data sent
  • Authorization rules
  • Stored card rules
  • Customer communications.

Compliance will increase approvals and mitigate fraud risk; Failure to comply will increase risk of financial losses and issuer declines while reducing EBIDTA. These changes are significant, impacting chargeback risk and financial penalties to heavy duty equipment rental.

Visa compliant solutions:

The complexity of compliance with both card present and card not present rules requires a solution that can dynamically manage it, removing employees from making decisions that could impact profits. Everyone must change in the ecosystem- card issuer, acquirer (credit card processor),  payment gateway and merchant. Whatever you had in 2016 was not compliant since all the other players were not ready yet.

Merchants should update to a payment gateway that supports at a minimum:

  • Estimated, initial, incremental, and final authorization requests (traditional terminals cannot comply
  • Authorization Reversals for unused authorization (amount changed)
  • Authorization validity periods
  • Stored credential rules
  • Creation and retrieval of customer opt-in records
  • Automated authorization and settlement amount matching (otherwise transaction downgrades to worst rate possible and other repercussions)
  • Verified by Visa, which uses the 3-D Secure protocol to shift fraud liability to the issuer, much like EMV does for retail.
  • verifone MX915 EMV terminal

    The Verifone MX915 EMV chip terminal is an option to use in a compliant rental solution.

If you have a payment gateway, or need one, ask these questions:

  • How will you help us comply with the new Disclosure to Cardholder and Cardholder Consent rules?
  • What does the consent record look like?
  • How will we retrieve records?
  • How long are the records retained?

Contact Christine Speedy to get a compliant solution for your rental services needs. 954-942-0483. The ROI for most businesses is virtually overnight! Month to month risk free solutions.

Another change of note is revisions have been made to split the “Other Fraud” Dispute condition under Enhanced Dispute Resolution into separate conditions for Card-Present and Card-Absent Transactions, and to incorporate changes to the payment
flow related to Disputes. For merchants that comply, it’s all good. For merchants that do not comply, there will be more risk of financial penalties and risk of issuer initiated chargeback. A key component to mitigate chargeback risk is support for Verified by Visa.

There are many nuances to the rules and potential chargeback reason code 72 risk, which were non-existent in the past. Rather than consumer initiating a chargeback, the issuer will be within their rights to initiate a chargeback if the merchant fails to comply with the rules, for example, failing to submit the correct authorization flag for an estimate.

Reference: Visa Core Rules and Visa Product and Service Rules, 15 October 2016. See especially Table 5-14, 5-21, 5-22. http://3dmerchant.com/blog/merchant-bulletins-downloads

Resources:

• https://usa.visa.com/support/merchant/library/visa-merchant-business-news-digest.html see articles on Visa Stored Credentials mandate and updated revisions on Visa Stored Credentials framework

• Some acquirers put out statement alerts on their April, June and or July merchant statements.

 Contact Christine Speedy to get a compliant solution for your rental services needs. 954-942-0483. You’ll be more profitable, efficient, and

Visa Authorization Rentals Rules Change

Visa announced sweeping changes to rental industry card acceptance rules in October 2016. Key changes include defining who initiated transaction, transaction data sent, authorization rules, stored card rules, and customer communications. Compliance will increase approvals and mitigate fraud risk;  Failure to comply will increase financial risk and issuer declines while reducing EBIDTA.

Visa Expansion of Special Authorization Allowances

Effective 15 October 2016, 22 April 2017, and 14 October 2017
Revisions have been made to rules related to the processing of Estimated Authorization Requests, Initial Authorization Requests, and Incremental Authorization Requests, as well as Authorization Reversals, Issuer hold releases, and Chargeback rights. These changes impact issuer, merchant, customer, and acquirer- whatever merchants have in place today is not sufficient for the future.

visa rental authorization rules 2017

Partial excerpt from section 5, Visa Core Rules. Applicable merchants should read the entire table and additional sections.

Truck and heavy duty equipment rental authorizations. Aircraft rental, Bicycle rental, Boat rental, Car rental, Equipment rental, Motor home rental, Motorcycle rental, Trailer park or campground rental are all impacted.

A core concept is authorization validity, which impacts merchant rights and potentially credit card processing rate qualification. An invalid authorization equates to no authorization. Card issuers will be within their rights to use reason code 72 and chargeback, or ACH, funds from merchant bank account on the next settlement day, for failure to comply with authorization rules. This is a significant change for most rental companies, as in the past, businesses typically responded to cardholder initiated disputes, a completely different scenario, and win a good portion of them.

With payment processing technology updates, rental companies can increase profits by complying with the new rules, including for guaranteed reservations. EBITDA is improved with increased approvals, lower qualified interchange rates, and fewer chargebacks.

What’s a valid authorization? It’s partially described in Special Authorization Request Allowances and Requirements. Key elements:

  • Stored credential– rules for storing; what associated data is required on file and what is submitted with transaction, including same transaction ID required for all subsequent authorizations after initial approval.
  • Estimated Authorization– indicator the authorization is an initial estimate and final amount is unknown is sent with transaction. TIP:  If the amount could change because the renter did not bring item back in time, or there are other terms in the contract where customer agrees to pay more under certain conditions such as damages or refueling, then the initial transaction is an Estimate.
  • Incremental authorization  – must use same transaction ID as estimate, and submit with incremental authorization indicator
  • Visa now groups transaction types into ‘customer initiated’ and ‘merchant initiated’. For card not present, a transaction is only considered customer initiated, if Verified by Visa is used. Verified by Visa (VbyV) is their brand name for the global 3-D Secure cardholder authentication protocol for customer initiated card not present transactions.

Updated Checkout Flow For Online Rental Booking:

  • Opt-in to no-show policy, terms and conditions
  • Authenticate cardholder
  • Authorize with the estimate indicator
  • Deliver email confirmation with the policy
  • Incremental auths with same Trans ID only.
  • Close transaction by day 31; partial reversal same transaction ID if applicable.
  • If ticket closed, open new estimated auth.

KEY DATES

  • April 22, 2017 – The Merchant must use the Estimated/Initial Authorization Request indicator.
  • 22 April 2017 – The Merchant must use the Incremental Authorization Request indicator and the same Transaction Identifier for all Authorization Requests.

Without action to update rental authorizations in advance of the April dates, financial exposure for prior months may be significant.

Visa Core Rules see PSR 346 and other pages.

Christine Speedy, authorized CenPOS reseller, provides universal payment processing solutions to maximize merchant profits and mitigate risk across multiple sales channels. To get a CenPOS account and Dynamics AX, SAP, Bluebird or other compatible plugin, contact Christine at 954-942-0483.