Credit Card Processing Blog

Discover’s ticket retrieval process is equivalent to what Visa calls copy requests: requests for information regarding a particular card transaction. These requests are typically initiated by cardholders who contact Discover to dispute or request clarification on a particular charge on their card accounts. Discover then contacts the merchant in writing and requests documentation regarding the transaction.

Once a request is received, the merchant has 20 business days to provide Discover with a copy of the sales receipt or a refund check. Discover can send the request by mail, email or by other electronic means. If the merchant does not respond within 20 business days, Discover may return the transaction to the merchant as a chargeback.

The sales receipt or a copy of it received by Discover is then sent to the cardholder for review or for identification of the card account number. Merchants can also provide a substitute transaction slip for some transactions, which needs to include the following information:

• The card account number.
• The cardholder name.
• The card expiration date.
• The transaction amount.
• The transaction date.
• The authorization code.
• The merchant name and location.
• A description of the merchandise / services.


For Mail Order / Telephone Order (MO / TO):

• The shipping address.


For transaction completed at self service terminals:

• The self service terminal locations code or city and state.


For transactions completed at an automated fuel dispenser:

• The service station identification number.
• The invoice number.

If any of the above items is missing, Discover can file a dispute, which can lead to a chargeback. A dispute can also be filed if the submitted copy of a sales receipt is illegible or incomplete. Such chargebacks are designated with code IC: “Requested Item Illegible Copy” and are equivalent to Visa’s Reason Code 60: “Requested Copy Illegible or Invalid.” Most of these chargebacks can be prevented by implementing the following simple measures:

• Do not reduce the size of the copies. All copies you make of transaction receipts should be the same size as the originals. Reduced size can produce images that are hard to read.
• Place your company’s logo where it will not obstruct the information. Make sure your company’s logo is printed on the sales receipt in a way that does not obstruct the transaction information.
• Change the printer’s ribbon regularly. Replacing the printer’s ribbon regularly will eliminate faded, hard-to-read sales receipts.
• Keep the top copy of the receipt. Keeping the top (white) copy of the sales receipt ensures better quality copies in the future. Give the colored copy to your customer.

For more on managing copy requests, review our previous article on the topic. Although it was written to address specifically Visa and MasterCard requests for information, the same general rules apply to Discover’s ticket retrievals.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

Visa uses Reason Code 60 to designate chargebacks resulting when a copy of a sales receipt, requested by the card issuer, is illegible, incomplete or something other than the requested item. MasterCard does not have a reason code that exactly matches Visa’s 60.

What causes these chargebacks? Chargeback Reason Code 60 may be caused by one of the following issues:

• The terminal’s printer ribbon was worn and the ink was too light.
• The printer’s paper roll was nearing its end, and the colored streak indicating this made some of the payment information illegible.
• The copy was on hard-to-read colored paper.
• The carbonless paper of the original sales receipt was mishandled, causing black blotches and making copies illegible.
• The original sales receipt was copied at a reduced size, resulting in illegible copies.
• The document submitted was not a copy of the sales receipt at issue.

How to manage such chargebacks? The time frame to respond to a chargeback Reason Code 60 is 7 days for U.S. transactions and 120 days for international ones. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• Legible or complete copy is available. Resubmit the copy, if possible, and make sure it is legible.
• The sales receipt is incomplete. If you don’t have or cannot produce a legible copy, accept the chargeback. Do not issue a credit at this time, as the chargeback has already performed this function.
• The sales receipt is incomplete and the transaction is fraudulent. In such cases, you have no re-presentment rights, as the cardholder cannot be expected to accept a fraudulent charge. You should accept the chargeback.

How to prevent chargeback Reason Codes 60? Most of these chargebacks can be prevented by implementing the following measures:

• Copying sales receipts. Make sure the copies you make of sales receipts are the same size as the originals. Reduced size can produce images that are hard to read.
• Change the ribbon of your point-of-sale (POS) printer. Regularly changing the printer’s ribbon will eliminate faded, hard-to-read sales receipts.
• Change the paper of your POS Printer. Changing the printer’s paper roll when the colored streak first appears increases the legibility of sales receipt.
• Keep the white copy of the sales receipt. Keeping the white copy of the sales receipt ensures better quality copies in the future. Give the colored copy to the customer.
• Handling carbonless and carbon-back paper used for sales receipts. Handle carbonless paper and carbon-back paper carefully. Carbon-back paper appears black when copied. Any pressure on carbonless and carbon-back paper during handling and storage causes black blotches, making copies illegible. Always keep the top copy.
• Placing company’s logo on sales receipts. Make sure your company’s logo is printed on sales receipts in a way that does not interfere with the transaction information.

As you see, preventing this type of chargebacks largely depends on the way you handle sales receipts. A rule of thumb that can be used here is that if you can read the copies of your sales receipts, issuers will also be able to read them and you will never see a Reason Code 60.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

Both Visa and MasterCard use special Reason Codes to designate chargebacks resulting when a card issuer receives a complaint from a cardholder stating that a merchant did not issue a refund when a purchased product was returned or services canceled, or a refund was issued but for a reduced amount, without proper disclosure. Visa uses Reason Code 85 and its MasterCard’s equivalent is 4860.

What causes these chargebacks? Chargeback Reason Codes 85 and 4860 may be caused because the merchant:

• Did not issue a credit.
• Issued the credit but did not deposit it with its processing bank in time for it to appear on the cardholder’s next statement.
• Did not issue a credit, because it does not accept returns, but did not properly disclose its return policy.

How to manage such chargebacks? The time frame to respond to Reason Codes 85 and 4860 is 120 days. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• Returned product or cancellation was not received. If you never received the returned merchandise or the service was not canceled, contact your processor immediately and explain the situation.
• Product was returned contrary to the disclosed policy. If the merchandise was returned not in the manner described in your return policy, provide your processor with documentation proving that the customer did agree with it and signed it. Keep in mind that, if your return policy is located on the back of the sales receipt, you will have to obtain your customer’s initials there, in addition to the signature on the front. When providing supporting evidence, you must send copies of both the front and the back of the receipt.
• Credit was issued. If you did issue a credit for the returned merchandise at issue, contact your processor and provide them with the date and amount of the credit.
• Credit is not yet issued. If you did not issue a credit for product that was returned according to your return policy, there is no remedy and you should accept the chargeback. Do not process the credit now, as the chargeback has already done that for you.

How to prevent chargeback Reason Codes 85 and 4860? Many of these chargebacks can be prevented by implementing the following best practices:

• Issue credits promptly and as agreed. If merchandise is returned according to your return policy, make sure to promptly issue a credit and to immediately notify your customer that it has been issued.
• Only issue credit to the card used in the sale transaction. Credit for returned merchandise should only be issued to the same card that was used in the original transaction. Ask your customers to retain the credit receipt until they see the credit posted on their accounts.
• Gift returns. If product was returned by a gift recipient and not by the cardholder, the credit to the gift recipient must be in the form of cash, check or a store credit. Be advised that, if the credit is to be issued to a bank card, it can only be issued to the one used in the transaction.
• Return policy disclosure. Make sure that your return policy is posted on the sales receipt. If not and until you do that, present an additional document (an invoice or contract) to your customer to sign. If the return policy is on the back of the receipt, make sure the customer initials it.
• No-return policy disclosure. If your organization does not accept returns, your policy should be clearly posted on the sales receipt and at checkout, for both virtual and physical stores.
• Obtain customer signature. Customer signature should always be obtained on your return policy; a verbal disclosure is not enough.

While it is not likely that you will ever be able to completely eliminate this type of chargebacks, developing a customer-friendly return policy will go a long way toward minimizing them. Customers expect that, if they are not satisfied with their purchase, a return will be accepted and a full refund issued. Otherwise, they will probably file a dispute with their credit card company. You will want to avoid such disputes, even if you believe you will win them, because customers are likely to broadcast them on the internet and damage your reputation. Customer disputes and resulting chargebacks are also closely monitored by processing banks that will promptly freeze your merchant account, if there is any uptick in such activities.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

Do you ever monitor your daily batch deposits? Do you know how your daily transaction volumes vary over a week or a month? Do you track how your average sale’s amount or transaction count changes from month to month? No? Well, your processor does and, if you want to avoid potential unpleasant surprises resulting from changes in these or other patterns in your daily batches, you should too.

Unfortunately, such unpleasant surprises occur far more often than we would like. They come in the form of an audit of the merchant’s credit card processing practices and can take anywhere from a day to a week or more to be resolved, depending on how quickly the merchant provides the requested documentation (e.g. sales invoices, bank statements, etc.). The worst part of an audit is that, while it lasts, the merchant’s funds are frozen and no deposits go into its checking account.

So what is it that processing banks are looking for when monitoring your daily batch deposits? To answer this question, we should look at the requirements that Visa and MasterCard (the Credit card Associations) have set for their member banks. Whether your processor is Bank of America, Wells Fargo, First National Bank of Omaha or any other bank, they all have to comply with the Associations’ rules.

Processing banks are required to generate daily reports or real-time alerts monitoring merchant deposits no later than on the day following the deposit, which must be based on the following parameters:

1. Increases in merchant deposit volume.
2. Increase in a merchant’s average ticket size and number of transactions per deposit.
3. Change in frequency of deposits.
4. Frequency of transactions on the same cardholder account, including credit transactions.
5. Unusual number of credits, or credit dollar volume, exceeding a level of sales dollar volume appropriate to the merchant category.
6. Large credit transaction amounts, significantly greater than the average ticket size for the merchant’s sales.
7. Credits issued subsequent to the receipt of a chargeback with the same account number and followed by a second presentment.
8. Credits issued to a card account number not used previously at the merchant.

Moreover, there are a couple of additional metrics that processors are either required or encouraged to monitor and you should be aware of them:

• 90-day rule. Processing banks are required to compare their merchants’ daily deposits against the average transaction count and amount for each merchant over a period of at least 90 days, to lessen the effect of normal variances in a merchant’s business. For new merchants, processors should compare the average transaction count and amount to other merchants within the same merchant business code (MCC) assigned to the merchant. In the event that suspicious credit or refund transaction activity is identified, the processor should consider the suspension of transactions and initiate an audit.
• 150 percent recommendation. To minimize the probability of investigating variances that are consistent with the merchant’s business cycle (i.e. seasonal, monthly, etc.), the Associations require that merchants that appear in the monitoring reports should exceed the average by 150 percent or more. However, the amount over the average is left at the processing bank’s discretion.

So if you want to make sure that you don’t get surprised by an audit, which by the way always happens at the most inconvenient moment, start monitoring the eight parameters listed above on a daily basis. Implement the 90-day rule and, whenever your transaction count or deposit amount exceeds the average by 150 percent or more, be proactive and contact your processor and alert them. You will find that they are much easier to work with when you show that you understand their concerns.

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).

Yesterday’s post reviewed how the Member Alert to Control High-Risk Merchants (MATCH) works and how it affects merchants and processors. This article will elaborate on the possible results from searches in the MATCH database. Firstly, though, it should be pointed out that all positive responses to a MATCH search are considered “possible matches” because the search system cannot guarantee an exact match with absolute certainty. This is the reason why you will see an oxymoronic-sounding “exact possible match” item in the list below.

A MATCH search can return one of the following types of possible matches:

• Retroactive possible matches. If the information in the original inquiry finds new possible matches of a merchant or inquiry record in the MATCH database added since the original inquiry was submitted and this information has not been previously been reported to the processing bank at least once within the past 120 days, the system returns a retroactive possible match response.
• Exact possible matches. An exact possible match exists when data in an inquiry matches data in any of the following data fields on the MATCH system letter-for-letter, number-for-number, or both.
  
  

  Field	+	Field	+	Field	=	Match
  Business Phone Number					=	√
  Business National Tax ID	+	Country			=	√
  Business State Tax ID	+	State			=	√
  Business Street Address	+	City	+	State	=	√
  Business Street Address	+	City	+	Country	=	√
  Principal Owner’s (PO) First Initial	+	Last Name			=	√
  PO First Name	+	Last Name			=	√
  PO Phone					=	√
  PO Social Security Number (if the country is USA)					=	√
  PO National ID (if the country is not USA)					=	√
  PO Street Address (lines 1 and 2)	+	PO City	+	PO State	=	√
  PO Street Address (lines 1 and 2)	+	PO City	+	PO Country	=	√
  PO Driver’s License (DL) Number	+	DL State			=	√
  PO Driver’s License Number	+	DL Country			=	√

  
  MATCH uses Street, City, and State if the merchant’s country is USA. Otherwise, Street, City, and Country are used.

• Phonetic possible matches. The MATCH system converts certain alphabetic data, such as Business Name and Principal Owner Last Name into a phonetic code, which generates matches on words that sound alike, such as “Easy” and “EZ.” The phonetic feature of the system also matches names that are not necessarily a phonetic match but might differ because of a typographical error, such as “Rogers” and “Rokers,” or a spelling variation, such as “Lee,” “Li,” and “Leigh.” MATCH evaluates the following data to determine a phonetic possible match:
  
  

  Field	+	Field	+	Field	=	Match
  Business Name					=	√
  Doing Business As (DBA) Name					=	√
  Business Street Address	+	City	+	State	=	√√
  Business Street Address	+	City	+	Country	=	√√
  Principal Owner’s (PO) First Initial	+	Last Name			=	√
  PO Street Address (lines 1 and 2)	+	PO City	+	PO State	=	√√
  PO Street Address (lines 1 and 2)	+	PO City	+	PO Country	=	√√

  
  MATCH uses Street, City, and State if the merchant’s country is USA. Otherwise, Street, City, and Country are used.

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).