Card present transactions
This section explains the common ways in which a card present transaction is accepted; an acquirer will be able to provide further details on all variations.
A transaction is described as being ‘card present’ when the cardholder and the card are present at the same time. When the card that is presented is a chip card then it is placed into the terminal. If a card does not have a chip then the magnetic stripe on the reverse of the card is swiped through the terminal.
The different ways in which to accept a card present transaction are listed below:
Chip & PIN
Now that chip & PIN is fully rolled out in the UK, the majority of UK issued cards will be processed as chip & PIN transactions.
When accepting a chip & PIN enabled card, it is placed into a PIN pad or terminal and prompts are provided on the action required. In most cases customers will enter their four digit PIN (Personal Identification Number) into the terminal or PIN pad – there are different procedures required for chip and signature cards and these details can be found below in the chip and signature section. When an authorisation has been given, the merchant is protected from cardholders claiming they did not take part in the transaction and the card issuer charging back the transaction.
However, this is not a defence against a chargeback if the goods or services supplied are not as described or are faulty.
In addition, when merchants accepts a chip & PIN transactions that have been correctly processed, as advised by their acquirer using a compliant chip & PIN terminal, a merchant may benefit from a liability shift should a chargeback be raised because the card is lost or stolen.
Chip and signature
There are a small number of chip and signature cards that have been issued to some disabled customers who have difficulty using a PIN. As with a chip & PIN card, these cards should be inserted into the terminal and a merchant will then follow the terminal prompts on what action to take next. In most cases, this will be to request that the cardholder signs for the purchase. A merchant will need to carry out security checks such as “does the signature match the one on the back of the card?”.
Contactless technology is a feature introduced in 2007 on many credit and debit cards for transactions of £20 or less. It works by cardholders holding their contactless-enabled card up to a secure reader to make their payments. This provides a fast and effective alternative to cash that can reduce queues, and utilises the security built into a chip & PIN card.
Contactless cards are secured by the same advanced technology that underpins chip & PIN. Though the card would not usually require a PIN to be entered, from time-to-time a chip & PIN transaction will be requested. This is designed to deter fraudulent use should a card be lost or stolen; each time a PIN is used it re-affirms you are in possession of your card.
There are still a small number of UK issued cards in circulation that are not chip & PIN enabled and have only a magnetic stripe; you should deal with these in the same way as for any foreign-issued cards that don't have a chip. To process a transaction using this type of card, you will need to swipe your customer's card through the terminal and follow the instructions provided to complete the transaction. As part of the process, you’ll require the cardholder to provide a signature on the terminal receipt to authorise the transaction. In the case of a fraudulent transaction – for example, a forged signature - different chargeback rights exist for this transaction type compared to that for a chip & PIN transaction.
PAN key entered
If you are accepting an overseas card with a magnetic stripe and this technology fails to work you may PAN Key Enter (PKE) the card account details (together with transaction amount) into the terminal. In these circumstances an authorisation request should be made.
Where merchants are processing transactions on paper vouchers, they will be using a manual imprinter or ‘zip-zap’ machine. You should place your customer’s card into the machine with a paper voucher and makes an imprint of the card onto the voucher. You then manually complete the purchase details on the voucher and ask your customer to sign.
Your acquirer will provide details of when you should use paper vouchers (including which card types cannot be processed this way), the checks that they have to make and the relative security of this type of transaction compared to processing the transaction using the chip on a chip & PIN card.
Paper vouchers can also be used to process card-not-present transactions and your acquire rwill advise if any special agreement is required, what the chargeback risks are and the correct processing procedures to use.