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Processing card transactions

Find out what to expect when processing card transactions and the definitions of relevant key terms.

 

Accepting Card Transactions

When accepting card transactions, you should seek authorisation from the cardholder's card issuer that the transaction details processed by your terminal are correct. You will receive an authorisation code for that particular transaction at that time on that day.

However, even though an authorisation has been given, it only checks whether:

  • There are available funds up to the value of the transaction at the time it is processed in that card account That the card used has not been reported as lost or stolen
  • Please note: An authorisation does not guarantee that a transaction is not fraudulent or that it will not be charged back at a later date.
 

Key Terms Used When Processing Card Transactions

Find below a list of links explaining terms which you may come across when accepting card transactions and can be fully explained by your acquirer.

 

Suspicious Card Transactions - Code 10

There may be occasions, in a face-to-face transaction when merchants are suspicious about a cardholder, the card or card type being presented or the circumstances surrounding the purchase. In these situations merchants can make a Code 10 call (if they feel it is safe to do so) to their acquirer's Card Authorisation Centre (CAC) where the operator will guide them through the process.

Answers to the CAC operator during a Code 10 referral will typically require ‘yes’ or ‘no’ responses.

Online Card Terminal Transaction

A terminal is said to have gone online when it dials out to connect to an acquirer in order to process a card transaction and request an authorisation. This may be because the chip on the card has told the terminal to do this, or because the transaction value is above a merchant’s agreed floor limit.

Offline Card Terminal Transactions

A transaction can be processed ‘off-line’, where the terminal does not dial out for an authorisation. This may happen, for example, if the transaction value is below the floor limit agreed by an acquirer, for which a merchant can accept a transaction.

Making A Referral in Card Transactions

When merchants are processing a card transaction their terminal may prompt them to make a manual authorisation call to the cardholder’s issuer – known as a referral. An acquirer's operating instructions will guide merchants through how to process a referral.

Understanding Terminal Messages When Accepting Card Payments

When merchants are accepting a card transaction, their terminal will provide prompts on the actions they should take.

What Is Telephone Authorisation?

There may be occasions when a terminal asks a merchant to call through a card transaction for telephone authorisation. The operator will guide the merchant through what needs to happen next.

Understanding The Floor limit

A floor limit is the value of a transaction that has been agreed between a merchant and its acquirer. Any transactions above this value will cause the terminal to go online to the issuer and request an authorisation that will be either approved, and an authorisation given, or declined. Conversely, where the card transaction value is below the floor limit the terminal can process the transaction offline, i.e. the terminal does not go online to the issuer, and stores the transaction details for transmission to the acquirer at a later time.

A floor limit is agreed by the acquirer and merchant taking into account any card scheme rules that may be applicable and will be pre-programmed into the merchant’s terminal.

When Merchants Must Fallback

When merchants cannot accept a card transaction using its standard method, they can fallback to the next available method. This may occur when the merchants' terminals or PIN pads have malfunctioned or there has been a power or telephone network failure and they have to fallback to using a manual imprinter. In this case, a merchant is said to have had to fallback to using a paper voucher. The card schemes require different fallback actions to be taken depending on the type of card being processed.

Where a terminal has not accepted a chip & PIN card because the chip cannot be read, a merchant can fallback to the card’s magnetic stripe and attempt to process the transaction on this basis by swiping the card.

Acquirers will provide details on what merchants should do when they have to fallback including details on which cards cannot be accepted on paper vouchers.

Making A Refund

There may be occasions when a merchant needs to make a refund on a card transaction for purchases made. This should only be done using the card that was used for the original transaction. When providing refunds, merchants are advised not to give a cash or cheque refund as this is a common method used by fraudsters to appropriate cash from the card.

An acquirer and terminal supplier will supply information on the correct procedure to use when making a refund.

Cancelling Transactions

If a merchant has processed a transaction, received an authorisation but then now wants to cancel the transaction or make a reversal, they must not process another immediate transaction.

For example, if there was a mistake with the transaction amount can be done, but the reversal has to be the next transaction that a merchant processes after the transaction that has to be cancelled. This means a merchant cannot process a transaction for another customer and then go back to cancel a previous transaction.

In this case, a merchant would have to make a refund rather than cancel the original transaction. This would mean that a merchant is processing two transactions and its acquirer will have negotiated how this will be charged.

End Of Day Reports

This is an action that merchants manually performs at the end of their trading day and is at a time agreed with their acquirer. This specified time can be referred to as the ‘Banking Window’.

This procedure will prompt a merchant’s terminal to produce a printout showing the value of card transactions, both debit for amounts taken by a merchant and credit where they have given a refund processed during their business day. It may also show the volume and values for each card type. By performing this procedure, a merchant’s acquirer can collect the day’s transactions that are stored on the terminal for processing.

An acquirer or terminal supplier will provide instructions on how this process can be performed.

Paper Card Sale vouchers

Paper sales vouchers are used if the merchant manually completes the sales details. A merchant places a voucher into an imprinter or zip zap machine together with the customer’s card that produces a carbon copy of the card details that are embossed on the front of the card. The voucher is then handed to the cardholder for them to sign.

Where a merchant has a working terminal, they must not use paper vouchers. However, there may be occasions when a merchant has to use a paper voucher where the terminal is not working.

Processing a transaction using a paper voucher presents a greater risk that it could be charged back than if the transaction was processed online using a terminal. For example, a merchant cannot authenticate the cardholder against the chip on a chip & PIN card. A merchant will also have to carefully inspect the card’s security features to guard against a counterfeit fraud.

Paper vouchers can also be used to process cardnot-present transactions and a merchant’s acquirer will advise if any special agreement is required, what the chargeback risks are and the correct processing procedures to use.

An acquirer will further provide details on the procedures to process and perform refunds on a paper voucher card transaction, banking these vouchers, and which cards cannot be accepted using vouchers.

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