Updated Card Absent Chargeback Rule – 540 days

Business to business, automotive  and parts dealers, are especially stung by chargebacks for disputes relating to the quality of merchandise or services received. Effective for transactions processed on or after April 18, 2015, is a new clause that can increase the chargeback period from 120 days to 540 days for US and Canada.

Both Visa and MasterCard have implemented the new rule. I didn’t find a similar rule in a quick research of Discover and American Express, but my research was not exhaustive.  The rules are not identical and readers are advised to read the rules thoroughly, as this article does not include the full context for when the rule applies.

Visa Core Rules and MasterCard Chargeback Guide October 30, 2014:

  • Visa Chargeback Reason Code 53 – Not as Described or Defective Merchandise
  • MasterCard Reason Code 4853—Cardholder Dispute—Defective/Not as Described

One goal of the MasterCard rule appears to be providing customer recourse for ongoing interrupted services. The customer paid for something, they complained and worked it out within 120 days, but then there were recurring quality issues.

They both make it clear that a customer does not have to return goods and services in order to dispute at a later date. This is a change from the old rule.

How can merchants protect themselves in a dispute for these reasons?

  • Written return policy and proof of acknowledgement
  • All guarantees in writing acknowledged
  • Signed sales orders; include specific deliverables and policies at the time of agreement
  • All written communications, including emails, prior to and after the sale as part of the dispute process.
  • Save a log of phone calls with who, what, when, to submit as evidence.
  • For online payments, require check box to acceptance of your terms of sale

Note: the 540 day rule has been in existence, however, the rules have been updated with more specificity, certainly for Visa.

How to reduce 75-CH Does Not Recognize Trans chargebacks for business to business

CenPOS merchants use the Electronic Bill Presentment and Payment service as a tool to avoid future disputes. EBPP sends electronic invoices via text or email in seconds with no integration required.  For business to business merchants, it’s common for the cardholder to be different from the person purchasing.

Avoid these issues:

  • Buyer wasn’t authorized for the purchase amount
  • Buyer bought something the boss wasn’t aware of or didn’t approve
  • Exposing personal card information to other people so they can make a purchase
  • Losses from fees related to disputes won or lost
  • Unauthorized buyer ships product to a different address

3 Ways CenPOS solves these problems:

  1. Cardholder can choose to store their payment methods directly with the merchant, never exposing their data to internal employees or the merchant employees.
  2. Cardholder can personally manage all payment methods via secure hosted payment site
  3. Cardholder is automatically notified when the card is charged
  4. Cardholder can inspect invoices remotely from anywhere, even if a purchasing agent has been designated to get the invoice.

In addition to the above, CenPOS has robust fraud tools for merchants to manage.

Example with traditional processing: A commercial repair shop employee calls a dealer for a part. He gives the parts manager his bosses credit card info over the phone and then picks up the part.

Example with CenPOS EBPP: A commercial repair shop employee calls a dealer for a part. The parts manager confirms the part is in stock,  selects the invoice template from the secure web page, adds an amount to charge and presses send via email or text message for the boss to pay. The boss opens the message, views the prefilled payment object on  a secure web page, selects his stored payment method, and presses submit.

EBPP Electronic Bill Presentment & Payment

Both the seller and buyer save time by eliminating the conversation about card numbers, PCI Compliance issues with recorded phone conversations, or poorly designed fax forms that don’t protect the merchant. Additionally, the payment receipt is delivered electronically to the owner. This e-billing solution is an effective tool to prevent future disputes with greater purchasing transparency.

Global Sales: Christine Speedy (954) 942-048

What is a Visa compliant credit card authorization form?

Do you accept fax order forms from your customers? Are you a business to business company needing to store credit card data on file for recurring billing of variable amounts? The typical fax authorization form does not meet Visa requirements.

Card Acceptance Guidelines for Visa Merchants link to Visa downloads.

You won’t find a “fax authorization form” in the guidelines, however, there is much information about receipt requirements.

2012 publication Transaction Receipt Requirements are referenced on page 495 and Recurring Transactions starts on pg 585. The guidelines vary depending on whether your recurring billing order is from an ecommerce or other method.

Sample of a receipt for a sale from a stored card transaction:

recurring sale receipt compliant

A fax order form for a one time purchase should comply with the  standard receipt requirements. The invoice detail is generally accepted on  a separate page for B2B; the invoice number should be on the receipt.

A recurring billing order form should comply with the recurring rules and standard receipt requirements.

Chargeback prevention tips for business to business, card not present:

  • Deliver a receipt via email to the cardholder immediately upon charging the card. If there is going to be a dispute, resolve the issue quickly.
  • Send an invoice detail.
  • Use EBPP.  If you send an electronic invoice to the cardholder and they click and pay, it’s pretty hard to dispute someone else ordered the items.
  • Bill to and ship to addresses should match unless you have something in writing from the cardholder that they authorize shipping to another address.
  • Get a signed recurring billing authorization form if you’re storing card data.
  • Make sure your receipts have ‘recurring’ or ‘repeat sale’ for recurring billing.
Sample of stored card data authorization to pay form, replacing a fax form.

Fax authorization form compliant

There are too many variables to address all the options for a compliant fax authorization form in this article. For PCI DSS compliance, we recommend you replace all traditional forms with exposed credit card or check data with one that references tokens, an alpha numeric string that replaces the card data and is useless outside your payment processing system, even if stolen.

CenPOS is a universal payment processing platform that provides efficiencies for merchants and their customers, reduces PCI DSS compliance burden, and many other benefits.

WHERE TO BUY

Contact Christine Speedy, 3D Merchant Services for all questions. Ask about how to become a CenPOS referral partner.  Call the hotline at the top of this web page or send a message via chat to become a customer.

CenPOS update leverages new CVV rule for magnetic stripe failures

CenPOS, a fast-growing payment processing technology, released a new feature for merchants to enable the automatic collection of CVV at the point of sale for key entered transactions including a failed magnetic stripe read.  The update supports the new Visa rule for card present transactions.

Effective October 15, 2011, merchants that prompt for and validate the Card Verification Value 2 (CVV) on any Visa CPS Key entry transaction (not to be confused with CPS Card-not-present) will no longer be required to take an imprint of the card to prove that the consumer was present at the time of the transaction. More importantly, merchants that implement this new procedure will no longer be liable for charge-back reason code 81 (Fraud Card-Present Environment).

 

cvv prompt for key entered face to faceThe CenPOS privilege in the Virtual terminal can be dynamically enabled or disabled by the merchant administrator. When enabled, the Virtual Terminal will automatically prompt for the CVV on any and ALL manually entered transactions. If in a retail environment with an attached signature capture terminal, the customer will still be prompted for their signature as usual.

cvv prompt for key entered face to face

To enable, click on the Administrator tab >merchant icon> processing data tab> click on “CVV Manual Entry”

About CenPOS
“Creating efficiencies through payment innovation”

Founded in 2009, Miami-based CenPOS is a payment technology provider. CenPOS is committed to providing its customers and partners with innovative solutions for today’s rapidly evolving consumer payment choices.

CenPOS is an intelligent payment-processing network that streamlines the payment experience for businesses and consumers by using state-of-the-art technology to replace inefficient, outdated payment systems. The network reflects the core values that drive the experienced and innovative CenPOS team: Simplicity, Scalability, Security and a holistic approach to payment processing strategies.

CenPOS provides solutions to a range of organizations including but not limited to retail, card not present merchants, automotive dealers, professional services and academic institutions; special programs are also available for non-profits.

Christine Speedy direct (954) 942-0483

New Card Acceptance Process for Magnetic-Stripe Failures at the Point of Sale

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.