Installment Prepayments Credit Card Processing Rules Change 2017

Installment prepayment credit card processing rules change effective October 2017 will impact business profits and chargeback risk. Everyone in the payment ecosystem has or will need to make changes to comply, including acquirer, issuer, payment gateway, merchant, and sometimes software solution.

payment gateway SaaS recurringInstallment prepayment credit card processing best practices:

  • When capturing card data to create a random token replacing sensitive data for the first time, perform an Account Number Verification Transaction via a Zero Dollar Authorization. There’s a payment gateway procedure, including using specific transaction indicator, for this. If the solution you’re using performs a $1 authorization, often with a void or reversal after, that’s because the payment gateway, and or the implementation, are out of date and don’t support current requirements. Ask how yours works and contact us for help now if you cannot do a zero dollar authorization!
  • Payment gateway to identify all future transactions after storing:

With an indicator that shows that the Transaction is using a Stored Credential
– With the Transaction Identifier of the initial Transaction.

  • The sales receipt must include phrase “recurring transaction”
  • A convenience fee cannot be charged on an Installment Transaction.
  • Transactions cannot be key entered into desktop terminals; a cloud based payment gateway is required

Guidelines and rules vary by card brand, business type and many other factors. Additionally, the rules are complicated. This article may oversimplify such complexities. Merchants are advised to use tools, including intelligent payment gateways, to help comply automatically to maximize profits and mitigate risk.

Reference: For example, read Visa Stored Credential Transaction Mandates and also Visa Core RulesTable 5-21: Requirements for Prepayments and Transactions Using Stored Credentials.

Before selecting a payment gateway for installments, ask these questions:

  • How will it help with new Visa Stored Credential Mandates compliance?
  • Does it support 3-D Secure cardholder authentication, for customer initiated payment?
  • What type of digital record is created at the time of customer opt-in to terms, how is it retrieved, and how long is it retained?
  • Does it support Zero Dollar Authorization?
  • Does the receipt dynamically change based on type of transaction, i.e. cash, credit card single payment, installment payment etc.
  • Does it level 3 processing for commercial cards (if applicable to business type)?
  • If I change banks or payment processors, how will it affect my customers? My business?

TIP: An easy starting point to reduce the list of options is to ask any payment gateway what type of digital record is created at the time of creating an installment agreement, and how will you access it? Need help to get compliant? Contact Christine Speedy to learn more about solutions for your business that are quick and easy to adopt, increasing efficiency and growing profits virtually overnight.

Visa Stored Credential Transaction Mandates 2017

Whether you use token billing or have been considering it, all businesses storing credit cards are impacted by Visa rules updates. Visa has published multiple updates about requirements for its Stored Credential Transaction framework, including mandates to identify initial storage and subsequent usage of payment credentials.

If your business stores credit cards, including a 3rd party payment gateway or any software, you’re impacted. Merchants should not assume that any software or technology in their payment processing ecosystem is automatically updated and compliant. To the contrary, there are specific items that merchants will need to take action to implement. Now is the time to learn more and make a plan. While some businesses were impacted in April, most have until October 15, 2017 to comply.

Visit the Visa USA web site for more information; Visa Merchant Business News Digest


TIP: All card brands have their own spin but frequently have similar rules. Need help to get compliant? Contact Christine Speedy to learn more about solutions for your business that are quick and easy to adopt, increasing efficiency and growing profits virtually overnight.

What is Auth Code 14, declined?

A credit card processing response of Auth Code 14, is a decline for Processor Declined, Fraud Suspected. Why does this happens for recurring billing, including unscheduled recurring billing using a stored credential, also known as a token on file? The method used to store the first transaction, and process subsequent transactions can impact authorization approvals.

For example, a merchant has successfully processed unscheduled transactions using a token on file since 2016. However, in 2017, declined for Auth Code 14 appeared.

auth code decline 14

Why would a previously stored and working card decline now? Look at the AVS,  ZIP, and CVV response above. Compare to the example below.

token billing

For the second receipt, AVS match Y= address and 5 digit zip match, Zip match Y=Address and 5 digit zip match, CVV = match X, cannot verify CVV. Because CVV was verified a match on the initial zero dollar authorization it’s not required to be presented on subsequent transactions.

The first example is returning that information does not match, thus the reason for suspected fraud. Without looking at the very first authorization when token was created, several possibilities exist, including  cardholder issued a new chip card with same number but other changes occurred in the interim; cardholder address changed or was never validated.

Merchants are at risk of issuer initiated chargeback if authorization rules are not followed. Refer to  Visa Product and Service Rules, Table 5-21: Requirements for Prepayments and Transactions Using Stored Credentials for more information. With recent rules changes, and more coming October 2017, merchants need a cloud based solution that can automate compliance. Not all of them have that intelligence. For example, some cloud based payment gateways enable merchants to perform prohibited transaction requests that put the authorization at risk of chargeback for non-compliance.

Due to many recent and upcoming changes for card absent and recurring billing with stored credentials, merchants are advised to review processes to include empowering customers to self-manage adding cards on file, and using cardholder authentication. Visa requires Verified by Visa for cardholder authentication in a card not present environment; without it, expect increasing declines.

Disclaimer: The rules of card acceptance are very complex and change typically twice a year, sometimes with interim bulletins regarding more changes. Merchants should read the manual for complete details regarding card acceptance for your business type.

Christine Speedy, authorized CenPOS reseller, provides universal payment processing solutions, including cardholder authentication, to maximize merchant profits and mitigate risk across multiple sales channels. Contact Christine at 954-942-0483.