Card Acceptance and Chargeback Management Guidelines for Visa Merchants

151 Pages·2008·2.53 MB·English

Card Acceptance and
Chargeback Management
Guidelines for Visa Merchants
Card Acceptance and
Chargeback Management
Guidelines for Visa Merchants

Table of Contents
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose and Audience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section.1:.Getting.Down.to.Basics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Visa Transaction Processing—From Start to Finish . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Visa Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Visa Rules for Returns and Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Visa Rules for PIN-less Payment Brand Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . 16
Dynamic Currency Conversion (DCC) Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section.2:.Card-Present.Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Doing It Right at the Point of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Visa Card Features and Security Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Signature and Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Suspicious Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Skimming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Code 10 Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Recovered Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Electron Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Visa Travelers Cheques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section.3:.Card-Absent.Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Fraud Prevention Guidelines for Card-Absent Transactions . . . . . . . . . . . . . . . . . 42
Additional Fraud-Prevention Tools for the Internet . . . . . . . . . . . . . . . . . . . . . . . . . 47
Suspicious Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Recurring Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Section.4:.Payment.Card.Industry.Data.Security.Standard.and.
PIN.Security.and.Key.Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
PCI DSS Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Visa PIN Security and Key Management Compliance Program . . . . . . . . . . . . . . 60
Merchant PIN Security and Key Management—
Essential Best Practices and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Additional Security Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Steps and Requirements for Compromised Entities . . . . . . . . . . . . . . . . . . . . . . . . 64
Card Acceptance and Chargeback Management Guidelines for Visa Merchants i
©2008 Visa Inc., all rights reserved, to be used solely for the purpose of providing Visa Card acceptance services as authorized pursuant to agreement with a Visa member financial institution.
➔ TABle of CoNTeNTS
Section 5: Copy Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Transaction Receipt Requirements—Card-Present Merchants . . . . . . . . . . . . . . . 68
Transaction Receipt Requirements—Card-Absent Merchants . . . . . . . . . . . . . . .69
Responding to Copy Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
How to Minimize Copy Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
Section 6: Chargebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Why Chargebacks Occur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
Customer Dispute Chargebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Invalid Chargebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Chargeback Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Avoiding Chargebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Chargeback Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
When Chargeback Rights Do Not Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
Section 7: Chargeback Reason Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
Non-Receipt of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
Reason Code 60: Request Copy Illegible or Invalid . . . . . . . . . . . . . . . . . . . . . . .92
Reason Code 75: Cardholder Does Not Recognize Transaction . . . . . . . . . . . . 94
fraud Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
Reason Code 57: Fraudulent Multiple Transactions . . . . . . . . . . . . . . . . . . . . . . 95
Reason Code 62: Counterfeit Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Reason Code 81: Fraudulent Transaction—Card-Present Environment . . . . .97
Reason Code 83: Fraudulent Transaction—Card-Absent Environment . . . . 100
Authorization errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Reason Code 71: Declined Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Reason Code 72: No Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Reason Code 73: Expired Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
Reason Code 76: Incorrect Transaction Code . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Reason Code 77: Non-Matching Account Number . . . . . . . . . . . . . . . . . . . . . 110
Processing errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Reason Code 74: Late Presentment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Reason Code 80: Incorrect Transaction Amount or Account Number
or Invalid Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114
Reason Code 82: Duplicate Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Reason Code 86: Paid by Other Means . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Reason Code 96: Transaction Exceeds Limited Amount . . . . . . . . . . . . . . . . . .118
Cancelled or Returned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120
Reason Code 41: Cancelled Recurring Transaction . . . . . . . . . . . . . . . . . . . . . .120
Reason Code 53: Not as Described or Defective Merchandise . . . . . . . . . . 123
Reason Code 85: Credit Not Processed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Non-Receipt of Goods or Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Reason Code 30: Services Not Provided or Merchandise Not Received . . . 128
ii Card Acceptance and Chargeback Management Guidelines for Visa Merchants
©2008 Visa Inc., all rights reserved, to be used solely for the purpose of providing Visa Card acceptance services as authorized pursuant to agreement with a Visa member financial institution.
➔ TABle of CoNTeNTS
Appendix 1: Training Your Troops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Training Materials for Card-Present Merchants . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Training Materials for Card-Absent Merchants . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Training Materials on Cardholder Information Security Program (CISP) . . . . . 135
Appendix 2: Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Card Acceptance and Chargeback Management Guidelines for Visa Merchants iii
©2008 Visa Inc., all rights reserved, to be used solely for the purpose of providing Visa Card acceptance services as authorized pursuant to agreement with a Visa member financial institution.
➔ TABle of CoNTeNTS
iv Card Acceptance and Chargeback Management Guidelines for Visa Merchants
©2008 Visa Inc., all rights reserved, to be used solely for the purpose of providing Visa Card acceptance services as authorized pursuant to agreement with a Visa member financial institution.
Introduction
What’s Covered
n Purpose and Audience
n Contents
Card Acceptance and Chargeback Management Guidelines for Visa Merchants 1
©2008 Visa Inc., all rights reserved, to be used solely for the purpose of providing Visa Card acceptance services as authorized pursuant to agreement with a Visa member financial institution.
➔ INTRoDuCTIoN
Purpose and Audience
For today’s Visa® merchant, accepting Visa payment cards has become
simultaneously easier and more complex . Electronic terminals and card
acceptance devices make transaction processing automatic and seemingly
effortless, raising potential profitability . However, they also create increased
possibilities for processing mistakes and fraudulent transactions that can result in
copy requests and chargebacks .
In addition, the walls between card-present and card-absent transactions have
become less obvious as growing numbers of traditional “brick and mortar”
merchants launch e-commerce websites, transforming themselves into “click and
mortar” businesses . Such merchants must, in effect, be “bilingual”—familiar with
both card-present and card-absent procedures .
Card Acceptance and Chargeback Management Guidelines for Visa Merchants is
a comprehensive manual for all businesses that accept Visa transactions . The
purpose of this guide is to provide merchants and their sales staffs with accurate,
up-to-date information on processing Visa transactions while minimizing the risk
of loss from fraud and chargebacks . This book is targeted at both card-present and
card-absent merchants and their employees and includes requirements and best
practices for doing business on the Internet . It also contains detailed information
on the most common types of chargebacks merchants receive and what can be
done to remedy or prevent them .
2 Card Acceptance and Chargeback Management Guidelines for Visa Merchants
©2008 Visa Inc., all rights reserved, to be used solely for the purpose of providing Visa Card acceptance services as authorized pursuant to agreement with a Visa member financial institution.
➔ INTRoDuCTIoN
Contents
Card Acceptance and Chargeback Management Guidelines for Visa Merchants is
organized to help users find the information they need quickly and easily . The
table of contents serves as an index of the topics and material covered .
Topics covered include:
✔ Section 1: Getting Down to Basics—An overview of how Visa transactions
are processed, from point of transaction to clearing and settlement . A list of
key Visa policies for merchants is also included .
✔ Section 2: Card-Present Transactions—Requirements and best practices
for processing card-present transactions at the point of sale including how
to minimize key-entered transactions and ensure legible sales receipts .
Suspicious transactions, Code 10 calls, and card recovery procedures are also
discussed .
✔ Section 3: Card-Absent Transactions—Requirements and best practices for
processing card-absent transactions including mail order, telephone order, and
Internet sales . Visa fraud prevention tools, such as the Address Verification
Service and Card Verification Value 2 (CVV2); requirements for e-commerce
websites; and procedures for recurring transactions are also covered .
✔ Section 4: Payment Card Industry Data Security Standard and PIN
Security and Key Management—CISP is the Payment Card Industry (PCI)
Data Security Standard (DSS) that Visa requires merchants and their service
providers to implement to ensure the security of confidential cardholder
account information .
✔ Section 5: Copy Requests—Requirements and best practices for responding
to a request for a copy of a sales receipt to resolve a cardholder dispute .
Information on minimizing copy requests, ensuring legible receipts, and
meeting sales draft requirements are also covered .
✔ Section 6: Chargebacks—Requirements and best practices for processing
transactions that are charged back to you by your merchant bank (from the
card issuer) . This section includes strategies for chargeback prevention, as
well as information on how and when to resubmit a charged-back transaction
to your merchant bank . A brief compliance process overview is also included .
✔ Section 7: Chargeback Reason Codes—Detailed information on the reason
codes for the most common types of chargebacks that merchants receive .
For each reason code, a definition, is provided along with the merchant’s
actions—or failure to act—that may have caused the chargeback, and
recommendations are given for resubmitting the transaction and preventing
similar chargebacks in
the future .
Card Acceptance and Chargeback Management Guidelines for Visa Merchants 3
©2008 Visa Inc., all rights reserved, to be used solely for the purpose of providing Visa Card acceptance services as authorized pursuant to agreement with a Visa member financial institution.