American Express maintains a zero-dollar floor limit on all card transactions accepted by U.S. merchants, unlike bigger rivals Visa and MasterCard whose floor limit on certain card-present transactions is $25. What this means is that American Express requires that merchants obtain an authorization approval on all transactions before processing them.
Similar to Visa and MasterCard, an American Express authorization approval by no means guarantees that the transaction is genuine, nor does it protect the merchant against a potential chargeback. AmEx defines the authorization’s purpose as providing the merchant “with information that will help them to determine whether or not to proceed with a Charge.”
Possible authorization responses. Merchants will typically receive one of the following responses to an authorization request, although the wording may vary:
- Declined or card not accepted.
- Please call or referral.
- Pick up.
Obtaining an authorization. Merchants who process card-present transactions electronically are required to transmit full magnetic-stripe data with their authorization requests through their point-of-sale (POS) terminal. If the POS system is down, the merchant needs to take an imprint of the card to validate its presence and to request a voice authorization. Be advised that voice authorizations are substantially more expensive to obtain.
Card Identification (CID) number. The Card Identification (CID) number is used in card-not-present setting to validate that the cardholder is in a physical possession of the card at the time of the transaction. The CID is part of the authorization process. It is a four-digit number printed on the front of each AmEx card. The CID is the equivalent of Visa’s CVV2 and MasterCard’s CVC 2.
If the CID provided by the customer differs from the one that is printed on the card (and is on file with American Express), the customer should be asked to provide it again. If it doesn’t match again, the merchant should not accept the transaction.
CID number, as CVV2 and CVC 2 codes, should never be stored.
Authorization reversal. When a merchant wants to void a transaction that has been approved, the merchant should call the American Express voice authorization center and request an authorization reversal. However, once a transaction is submitted to American Express, it can no longer be canceled or changed.
Authorization time limit. If a merchant submits a transaction to American Express more than 30 days after obtaining the original authorization, it is required to obtain a new six-digit approval code before submitting the charge.
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