|
Authorization
Process
When
choosing a bankcard service provider its important to construct a
relationship with someone that has extensive industry knowledge.
In essence you trust an organization with your money,
revenue and financial well being of your company.
Put
your trust in our hands. Ameribanks
Inc. has 30 years of combined bankcard experience.
Our highly trained staff of Customer Account Executives
will create a bankcard program that is specifically created to
your Industry, Processing Volume, Services and target market.
We go beyond the basics of accepting a credit card.
To
familiarize yourself with the Authorization and Settlement
process, we have included educational material below to assist in
learning about the bankcard industry.
Let’s
look at how an electronic Authorization is accomplished:
Authorization can
happen in two ways:
· Electronic
The merchant swipes
the card through a credit card terminal or point-of-sale (POS)
device (or manually enters the card number) and the POS device sends
the transaction data electronically for authorization.
· Voice
Authorization
The merchant calls the Voice
Authorization Center. The Voice Authorization Center has a
computer system that communicates with Issuing Banks to relay
the transaction data. An operator gives the merchant the
Authorization response that is received from the Issuing Bank.
The majority of Authorizations are
obtained electronically. However, if a merchant does not have a
terminal, if the terminal is not working, or if the Issuing Bank
requests more information from the merchant before an authorization
can be given, the Authorization can be obtained from the Voice
Authorization Center.
· STEP 1 - Authorization of the
Purchase
The transaction begins when you
purchase goods or services using a credit or charge card. Before
the sale can be completed, the merchant must get Authorization
from the Issuing Bank that the card can be accepted.
A transaction can happen in one of
two ways:
· Face-to-Face Transaction
In a face-to-face transaction,
you are present with your credit card in the merchant’s
establishment at the time of the sale. The merchant must swipe
your card through the terminal, which reads the magnetic stripe
on the back of the card. That stripe contains the card number
and other identifying information.
Sometimes the magnetic stripe on
a card becomes damaged and the terminal cannot read the
information on the stripe so the merchant cannot swipe the card
through the terminal. When this happens, the merchant must make
a physical imprint of the card to prove that it was present at
the time of the sale. The card number and expiration date must
be keyed into the terminal manually for authorization.
· Mail or Telephone Order
In a Mail Order or Telephone
Order transaction, you place an order by mail or phone.
Neither you nor your credit card is present at the merchant’s
establishment at the time of the sale. The merchant must verify
your address in a mail or telephone order transaction by
using the Address Verification Service (AVS). The
terminal will ask the merchant to enter at least your Zip Code.
The merchant will key in the card number since he doesn’t have
your card to swipe.
· STEP 2 - The Host
The terminal sends the
transaction information to the Host computer, which reads
the card number and determines where to route the message so
that it gets to the correct card Association, i.e. VISA,
MasterCard, Discover.
· STEP 3 - The Issuing Bank
The Host sends the
message to the Issuing Bank through the VISA or MasterCard network.
The bank determines whether the credit card can be accepted and
sends a response back to the Host.
The Issuing Bank can send back one
of four responses to a merchant:
· Approval
Code
This response indicates that you
have sufficient credit available to complete the sale and you
have not reported the card lost or stolen. The merchant records
this code on the sales draft. An approval code is not a
guarantee of payment.
· Declined
This response indicates that the
Issuing Bank will not approve the charge. There are many reasons
for this - the charge may exceed the amount left on your credit
line, for example. The merchant should ask you for another form
of payment. The merchant is not given the reason for the
decline. If you want to know why the sale was declined, the
merchant should direct you to the Issuing Bank.
· Declined
Pick-Up
This response is given when the
Issuing Bank wants the card returned for some reason. The
merchant is not required to keep the card - it should only be
kept if he or she feels it can be done safely. The merchant
should refer you to the Issuing Bank to find out why the card is
to be picked up. If the merchant does keep the card, there is
generally a reward. He or she should cut the card lengthwise
across the magnetic stripe and send it to the security
department in Knoxville. The merchant should include with the
card his or her merchant number, address, and the date the card
was picked up.
· Referral
or “Call Auth”
This response indicates that the
Issuing Bank wants the merchant to call the voice authorization
center, which will either give an approval code or ask the
merchant to get additional information that the Issuing Bank has
requested, such as your address or mother’s maiden name. The
voice authorization operator will give the requested information
to the Issuing Bank and the Issuing Bank will either approve or
decline the sale.
· STEP 4 - The Host
The Host reads the Terminal ID (TID)
Number included in the message and sends the Issuing Bank’s
response to the merchant’s terminal.
· STEP 5- The Merchant Receives
the Response
If the Issuing Bank authorized the
transaction, the authorization code is recorded on your credit
card slip.
· In a Face-to-Face
transaction, you sign the slip, the merchant checks your
signature against the one on the back of the card, and you leave
the store with your merchandise.
· Your signature is not possible
in a Mail or Telephone Order transaction because you are
not present to sign the slip. The merchant settles the
transaction to your card as soon as the merchandise is shipped
out to you.
|
