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.

Installment 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authorization, often with a void or reversal after, that’s because the payment gateway, and or the implementation, are out of date and don’t support current requirements.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.