Requirements for Acceptance of MO / TO Discover Transactions

We recently reviewed the requirements for accepting card-present Discover transactions. In this post we will go over the requirements for processing mail and telephone order (MO / TO) sales.

Just as is the case with Visa and MasterCard, the floor limit for card-not-present Discover transactions is zero. This means that merchants accepting Discover card payments over the telephone or in the mail are required to obtain an authorization approval for each transaction. Listed below are the payment acceptance procedures that need to be followed for MO / TO transactions:

1. Cardholder verification. Although it is not a mandatory requirement, MO / TO merchants should verify the cardholder’s billing address and confirm the delivery address by using the Address Verification Service (AVS). AVS confirms an address provided by the cardholder by comparing it with the one on file with Discover. It is a strong tool for protection against fraud, although it does not eliminate the possibility of chargebacks.
2. Documentation of card sales. Merchants are required to include all merchandise and / or services purchased at one time on one sales receipt. Additionally, the following information must be provided for each mail or telephone order card sale:
   • Cardholder name.
   • Card account number.
   • Card expiration date.
   • Merchant’s name.
   • Shipping address.
   • Description of the merchandise or service purchased.
   • Total amount of the transaction (including sales tax and / or tip).
   • Transaction date.

   
   Merchants should retain the transaction information, along with the shipping date, for at least six months and provide it per request in case of a chargeback or a customer dispute.

3. Transmission of transaction information. Merchants are required to transmit their Discover card transaction data daily. For all MO / TO transactions, the sales data should not be transmitted until the merchandise or services have been shipped, delivered or provided. MO / TO merchants are allowed, however, to accept deposits on their sales and can send to Discover transaction data related to such deposits before the shipping or delivery date.
4. Delivery requirements. MO / TO merchants are required to provide the cardholder, at the time of delivery of the products or services, with an invoice or other documentation that includes the information listed in section 2 above. Merchants should consider using shipping services that allow them to obtain the cardholder’s signature as proof of delivery, which can later be used in case of a customer dispute or a chargeback. If a cardholder comes to the merchant’s location to pick up a product ordered by mail or telephone, the merchant is required to obtain an imprint of the card and the cardholder’s signature.

Most MO / TO merchants now use virtual terminals for processing their card transactions. Virtual terminals are typically set up to automatically provide Discover, as well as the other card networks and companies, with the information they require, in the manner they have prescribed. You should not take this for granted, however, and double check with your processor. Additionally, and this is entirely within your own control, you need to ensure that, for all MO / TO sales, transaction data are not transmitted to your processing bank until the merchandise or service have been shipped or provided.

Image credit: Discoverstudentcenter.com.