29 April, 2015

What You Need to Know About Credit Card Processing

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credit card processing

Credit card processing terminology can seem like the most confusing of foreign languages. From all of the acronyms and specific industry terms, it can dumbfound the smartest among us. So it’s understandable if there is apprehension to either start the process of finding a new credit card processor, or switching processors.

To help you get more comfortable with the process, Humboldt Merchant Services has put together a few of the most commonly used terms that will assist you in making your decision easier.

Annual Percentage Rate. Interest rate, points, broker fees and other charges paid by a consumer in a loan transaction.

Auto-representment Chargebacks
Dispute resolutions that were automatically resolved on the merchants’ behalf without their knowledge or intervention.

Address Verification Service. This service allows a merchant to verify a cardholder's billing address against the card issuer's records during the authorization process and prior to completing a sale. AVS is especially helpful in preventing fraud when processing Mail Order Telephone Order (MOTO) transactions. This is an optional service that helps protect against fraud by verifying the identity of the person claiming to own the payment card. The system will check the billing address of the payment card provided by the user with the address on file at the payment card company. Note: AVS DOES NOT guarantee that a transaction is valid. Example: Message sent to merchant may be "approved, no match." A MOTO merchant would be advised to not ship this product.

Card Not Present Transactions
Card transactions for which the customer's card is not presented to the merchant at the point of sale (POS). Example: Internet or MOTO purchases. Interchange fee is set higher on these transactions due to increased risk with these types of transactions, and because they require keypad data entry.

A bankcard transaction that is under dispute. This is initiated by the issuer to settle a financial claim arising from a perceived lack of adherence to the conditions of the sales agreement, association regulations and/or the operating procedures. It occurs after the sale has been settled and merchant has received funds. The burden of proof rests on the merchant. A failure to reply within the requested time frame will result in loss of funds in question.

Code 10
A universal code that provides merchants with a way to alert the voice authorization center that a suspicious transaction is occurring without alerting the cardholder (or person presenting the bankcard). Code 10 calls are made when merchants are suspicious about accepting a payment card. The operator then asks the merchant a series of YES or NO questions to further clarify reasons for merchant suspicion. The merchant may be asked to retain the card if it is safe to do so.

Mail Order Telephone Order. A transaction that is entirely keyed. It is a type of transaction in which the merchant typically has a card terminal and manually keys in the required card information for transmission to the appropriate authorization network.

Negative Deposit
Occurs when the dollar amount of a credit draft submitted for deposit to the deposit account exceeds the dollar amount of the sales drafts submitted for deposit.

Non-Sufficient Funds. Used to indicate that a demand for payment cannot be honored because insufficient funds are available in the account on which the instrument was drawn.

No Signature Required. No need to get a signature for transactions under $25 for certain merchant category codes (MCC) or standard industrial classifications (SIC). No receipt is required to be provided to customer.

POS Terminal
An electronic device placed at the point of sale (POS). It’s connected to a system via telecommunication lines and is designed to authorize, record and/or forward sales transactions by electronic means.

Stored Value Card
A type of electronic bank debit card. Stored-value cards have a specific dollar value programmed into them. Banks provide these cards as a service for customers who cannot open checking or other deposit accounts. These types of cards are reloadable.

To learn more about how Humboldt Merchant Services can provide your business with hassle-free credit card processing, visit www.hbms.com.

Topics: Humboldt

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