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.

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