Some Changes In Credit Card Processing

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As of October 17th, 2014 Visa and MasterCard will be enforcing revised standards in the handling of declined transactions for card not present activity.

MasterCard’s requirement is intended to discourage repeated and excessive resubmissions by merchants of certain types of previously-declined transactions, which can burden issuer processors’ systems. Generally, such practices occur with preauthorized recurring or installment transactions. Merchants are permitted to resubmit such transactions, with limitations, if initially declined; however, transactions that are declined as lost, stolen, capture (pickup) card, or invalid will never be eligible for a subsequent issuer approval and repeated resubmissions can be costly for issuers.

Enforcement of MasterCard’s requirement will occur by means of issuers submitting non-compliance complaints to MasterCard in response to abusive authorization practices of this nature. MasterCard will not systematically enforce, and the rule is not intended to obligate a merchant to monitor and inhibit cardholder-initiated, standalone purchases from being submitted for authorization based on prior activity associated with the account number.

The risk of being fined by MasterCard is present, if MasterCard is advised that a merchant continues to resubmit previously-declined transaction and does so in an abusive manner.

What is changing?

The revised standards dictate that in the event of a declined transaction, merchants are no longer permitted to resubmit transactions that have declined for any of the following decline reasons:

  • Pickup Card
  • Invalid Account Number
  • No Such Issuer
  • Pickup Card – Lost Card
  • Pickup Card – Stolen Card
  • Expired Card

Please Note: If an updated expiration date or account number is obtained from the customer, the transaction may be resubmitted for authorization using the updated account information.

Enforcement

Enforcement will consist of issuers submitting non-compliance complaints to Visa and MasterCard in response to abusive authorization practices that do not adhere to the revised standards. It is important to note that MasterCard will not systematically enforce, and the rule is not intended to obligate a merchant to monitor and inhibit cardholder-initiated, standalone purchases from being submitted for authorization.

Please Note: Not adhering to the revised standards could result in fines from credit card companies, starting at $1,000.

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