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).

The settlement of a Discover transaction is the process by which Discover reimburses a merchant for the amount of each card sale that the merchant has submitted. The settlement total is the sum of the following items submitted by the merchant:

• Purchases made in the form of card sales.
• Minus credits issued to Discover cards.
• Plus or minus adjustments made by Discover to reconcile or correct errors in your transaction data. All debit (chargebacks, adjustments, and discount) activity aside from credits is invoiced at the end of the month and is not deducted from the settlement amount.
• Adjustments or discrepancies between the batch total and the actual sales detail are offset against the same or subsequent business day’s settlement total.

Settlement adjustments. Discover makes adjustments on transactions that have been improperly processed. Adjustments may be initiated by Discover or at the merchant’s request. Reasons for adjustments include:

• Sales or returns processed on the incorrect account number.
• The total of card sales and credits submitted with the merchant’s batch did not match the actual total of transactions processed by Discover.
• Card sales or credit slips were illegible, incorrectly completed or incomplete.
• Items other than card sale transactions or credits were submitted.

Discover uses the following adjustment reason codes:

Merchant statements. Discover provides merchants with monthly activity reports listing the card transactions processed by the merchant during the period covered by the reports, including any sales, the merchant fees and other fees applicable to these sales, any credits, chargebacks and any other transactions. Typically, these reports are included in the processing statements that Visa and MasterCard processors send to their merchants. In fact, most processors now fund their merchants for their Discover transactions, in addition to the Visa and MasterCard ones.

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).

A recurring or installment payment plan exists when a series of charges, either of a fixed or variable amount, are paid over a period of time. With installment plans, the number of payments is fixed, while recurring plans exist indefinitely, until canceled by the consumer. Discover requires merchants that process installment and recurring payments to comply with the following requirements:

• Authorization. Discover requires merchants to obtain a separate, current authorization for each installment charged to a cardholder under a recurring or installment payment plan, before submitting the transaction for settlement. An authorization approval for one installment payment is not a guarantee that any future installment will be authorized.
• Cardholder’s approval. Merchants are required to obtain the cardholder’s written approval to charge their cards over the term of the recurring or installment payment plan. If approval is given over the internet, merchants need to retain some kind of electronic evidence. In any case, the approval must include all of the following information:
  • Cardholder’s name, address and account number.
  • Amount of each installment.
  • Timing or frequency of payments.
  • Length of time over which the cardholder permits you to bill installments to his or her card.
  • The merchant’s merchant number as assigned by Discover.
  • Card expiration date.
  • Dollar amount of the transaction, including tax and tip (dollars and cents).

  
  Merchants are required to retain evidence of the cardholder’s approval of the installment or recurring plan for at least the duration of the installment plan. If the plan is renewed, the merchant needs to obtain a new evidence of the cardholders approval.

• Submission of transaction data. Recurring and installment transactions should be submitted the way one-time transaction data is submitted. If the account is closed for whatever reason, the merchant needs to request an alternative form of payment from its customer.
• Fixed and variable payment plans. Whether a recurring or installment plan features installments of the same amount, or the amount of each installment in a recurring or installment plan varies, merchants are required to submit transaction information to Discover for each recurring or installment payment they accept. If a merchant wants to make any changes to a fixed or variable payment plan, it needs to contact Discover before making these changes.

For the most part, Discover recurring and installment payment plans need to comply with the same requirements as they would have to if the card was a Visa or a MasterCard. We have written in detail on managing the various aspects of such plans in previous posts and encourage you to review them.

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).

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.

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).

Accepting Discover card payments is broadly similar to accepting Visa, MasterCard or American Express payments, with a few differences. This post will review the process merchants must follow for each card-present Discover sale they accept.

When a Discover card is presented for payment at the checkout, the merchant is required to perform the following actions:

1. Card expiration date. The first thing you should do is check the card’s expiration date. The card is valid through the last day of the month embossed on it. Merchants are not allowed to accept expired cards and are required to call Discover’s authorization center at 1-800-347-1111.
2. Card signature. Verify that there is a signature on the back of the card and that it matches the name embossed on the front of the card. If the card is not signed, request two pieces of identification, one of which is a picture identification. When you have confirmed that your customer is the cardholder, have him or her sign the back of the card.
3. Obtain authorization. If you are using a point-of-sale (POS) terminal, you are required to transmit the full magnetic stripe data, obtained when the card is swiped through the terminal, with the authorization request. If the magnetic stripe is unreadable and you have to key the transaction information in, you must take a manual imprint, to validate that the card is present. If you fail to take a manual imprint for any key-entered transaction, you will be liable for any resulting chargebacks.

   
   If your POS terminal is unable to connect to Discover’s electronic authorization system, you should call Discover’s authorization center for a voice authorization. Be advised that the floor limit for all Discover transactions is zero, which means that they all must be authorized. Transactions processed without first obtaining an authorization approval may be immediately charged back to you.

   
   For transactions where the merchandise is shipped or the service provided more than thirty days after the order is made, you need to obtain an authorization at the time the order is placed and again immediately before shipping the product or providing the services to the cardholder.

4. Sales receipt. All products and / or services purchased at one time and at one POS terminal must be included on one sales receipt. Split sales, where a merchant uses two or more sales receipts for a single transaction, are not allowed, except for partial payments. The customer must receive a copy of the sales receipt at the time the transaction is completed.
5. Required transaction information. For swipe transactions that are processed electronically using a POS terminal, required information is automatically transmitted to Discover and you are generally not required to obtain a card imprint on the sales receipt. However, if your terminal is not able to read the card’s magnetic stripe, you must obtain a card imprint and include all of the following information on the cardholder’s copy of the sales receipt:
   • The card account number.
   • The cardholder’s name.
   • The card expiration date.
   • The merchant’s name.
   • A description of the purchased merchandise or service.
   • The total amount of the card transaction (including sales tax and / or tip).
   • The transaction date.

   
   For electronically processed transactions, you should compare the account number printed on the transaction receipt to the one on the front of the card. If the two numbers do not match, you should not accept the card.

6. Refunds and returns. If a cardholder returns products or services purchased with a Discover card and in accordance with your return policy, you are required to issue a refund. Your return policy should be clearly displayed and communicated to the cardholder at the time of the sale.

As you see, there is nothing in Discover’s card acceptance requirements that is all that different from Visa’s or MasterCard’s. In general, if you follow the requirements of any of the major credit card companies or associations and apply them to all of your card transactions, you will be in compliance with all of them.

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).