My Merchant Account Blog

Authorization Error Codes for Chargebacks

Saturday, October 28, 2006

Authorization errors can happen from time to time. If the merchant is in a hurry and does not place close attention to the POS terminal as the transaction is being processed, there is a chance that the transaction could be charged back by the issuing bank.

Reason Code 70: Account Number on Exception File

This is when the card issuer received a transaction that was below the merchant's floor limit and the account number was listed on Visa's Exception File maybe because the merchant either did not check the Exception File or received a negative response.

The most common cause is when the merchant processes the transaction below its floor limit without making sure that the exception file had been checked. Floor limits are typically specified in merchant agreements, and the exception file is part of the merchant bank's or third-party processor's transaction processing system; that is, it should be automatically checked when a card is swiped. Floor limits are zero for all card-not-present transactions. This means that they always require authorization regardless of the dollar amount of the transaction.

If you are notified of the chargeback and you did check the Exception File, inform your bank the date that the Exception File was checked. You do not have to send a copy of the receipt, as the bank should be able to check its transaction log. If you did not check the Exception File, accept the chargeback.

When doing the transaction, check the exception file before completing transactions below your floor limit to help prevent this type of chargeback. With most POS terminals, the exception file is checked automatically when the card is swiped and the dollar amount entered. If in doubt, check with your merchant bank or third-party processor to make sure their transaction-processing system automatically checks the exception file for your under-floor-limit transactions and tell your sales staff that if they are ever in doubt about whether an authorization is necessary, they should request an approval.

Reason Code 71: Declined Authorization

This usually happens when card issuer received a transaction for which authorization had been declined. Usually the merchant attempted to circumvent or override a declined authorization by one of the following methods:

• Forced posting: After a decline response, the merchant forced the transaction through without attempting another authorization request
• Multiple authorization attempts: After an initial authorization decline, the merchant re-swiped the card one or more times until the transaction was authorized. In this situation, authorization might occur if the card issuer's authorization system times out or becomes unavailable, and the transaction is forwarded to Visa
• Split transaction: When a transaction for a certain amount is declined, the merchant splits the amount into several smaller transactions, each of which is submitted and authorized separately
• Alternative authorization method: The merchant swiped the card at a POS terminal, and the authorization was declined. The merchant then resubmitted the transaction by key entry or called in a voice authorization, and received an approval

If you are notified of a chargeback and the transaction was authorized, and you have an authorization approval code, inform your merchant bank of the transaction date and amount. Multiple authorizations attempts may not be accepted if the first authorization was declined.

When completing a transaction, obtain an authorization before completing transactions exceeding your floor limit to help prevent this type of chargeback. If you are unable to get an electronic authorization because your terminal isn't working or because the card's magnetic stripe cannot be read, call your voice authorization center. If the transaction is approved, write the approval code on the sales receipt in the appropriate space, and imprint the card's embossed information onto the receipt, using a manual imprinter.

Reason Code 72: No Authorization

This usually happens when the card issuer received a transaction that exceeded the merchant's floor limit and authorization was not obtained. The merchant did not obtain an authorization for a transaction above its floor limit or, for card-present transactions, obtained it after the transaction date. Floor limits are typically specified in merchant agreements. Any transaction above a merchant's floor limit must be authorized.

If you do receive a chargeback, and the transaction was authorized, inform your merchant bank of the transaction date and amount. If the transaction was not authorized, accept the chargeback.

During a transaction, obtain an authorization before completing transactions exceeding your floor limit to help prevent this type of chargeback. The authorization request is sent automatically when you swipe the card and enter the dollar amount. If you are unable to get an electronic authorization because your terminal isn't working or because the card's magnetic stripe cannot be read, you can request an authorization either by key-entering the transaction or calling your voice authorization center. If the transaction is approved, be sure the approval code is on the sales receipt in the appropriate space; in the case of a voice authorization, you will need to write it on the receipt. You should also imprint the embossed account information from the front of the card on a sales receipt or manual sales receipt form, which the customer should sign.

Reason Code 73: Expired Card

This usually happens when the card issuer received a transaction that was completed with an expired card and was not authorized.

Card Not Expired--Key-Entered Transactions

For key-entered transactions, the expiration date should be on the manually imprinted copy of the front of the card. If the expiration date on sales receipt shows the card had not expired at the time of the sale, send a copy of the receipt to your merchant bank. The chargeback is invalid regardless of whether authorization was obtained.

Card Expired, Authorization Obtained

If the card was swiped or a manual imprint made, an authorization approval was obtained as required, inform your bank of the transaction date and amount. Many merchant banks automatically handle this type of chargeback so you never see it.

Card Expired, No Authorization Obtained

If the card is expired and you did not obtain an authorization, accept the chargeback.

When completing the transaction, check the expiration or "Good Thru" date on all cards. A card is valid through the last day of the month shown; for example, if the Good Thru date is 07/10, the card is valid through July 31, 2010 and expires on August 1, 2010.

If the transaction was a MO/TO or Internet transaction, then the expiration date provided by the cardholder is considered correct. Many merchant banks automatically handle this type of chargeback, so you really never see it.

Always request an authorization for transactions on expired cards and submit the expiration date on the card as part of the authorization request. The expiration date is submitted automatically when you swipe a card. If a transaction is not approved, do not complete the sale.

Reason Code 76: Incorrect Transaction Code

This is when the card issuer received a complaint from a cardholder, stating that a debit was received for a transaction that should have been credited to the account. This can happen when the merchant issued a credit voucher but it posted as a sale instead.

If you receive a chargeback, and the correct code was posted, provide your merchant bank with documentation of the transaction, showing that it was posted correctly as a credit to the cardholder's account (and a debit to your account).

If the transaction was posted as a sale, accept the chargeback.

The easiest way to prevent this chargeback is when issuing a credit voucher, be sure to use the credit transaction code on your POS terminal.

Reason Code 77: Non-Matching Account Number

This is when account number transmitted to the card issuer did not match any account number on the card issuer's master file, and the transaction was not authorized. It usually happens when the merchant incorrectly key-entered the account number or incorrectly recorded the account number for a mail order or telephone order.

If you are notified of the chargeback and the account number matches, matches the account number cited on the chargeback, and the transaction received an authorization approval, return the chargeback to your merchant bank and request your bank to include the authorization log for this transaction when returning it to the card issuer. If the account number on the sales receipt does not match the correct account number cited on the chargeback, accept the chargeback, then process a new transaction with the correct account number, and be sure to request an approval code.

Chargebacks on Card-Not-Present Transactions

If the account number on the sales receipt matches the account number cited on the chargeback, and the transaction was authorized as a mail order, telephone order, or Internet transaction, return the chargeback to your merchant bank. Request the bank to include the authorization log for this transaction when returning it to the card issuer. Many merchant banks handle this type of chargeback automatically, so that you never receive them.

If the account number does not match, accept the chargeback.

Transaction Catch

After accepting the chargeback, the new transaction with the correct account number should be submitted within 30 days of the original transaction. Due to the chargeback cycle, in most cases, merchants will be unable to meet this time frame, which may in turn result in a second chargeback for Reason Code 74, Late Presentment.

Card-Present Transactions

If you swipe a card and the terminal cannot read the card's magnetic stripe, request authorization by key entering the account number. Be sure the key-entered account number matches the embossed account number on the card; be careful not to transpose numbers. Use a manual imprinter to imprint the embossed information from the face of the card onto the sales receipt that is signed by the cardholder.

If your terminal is not working or you do not have a terminal, call your voice authorization center for authorization approval and write the authorization approval code on the sales receipt in the appropriate space. Use a manual imprinter to imprint the embossed information from the face of the card onto the sales receipt that is signed by the cardholder

Compare the account number displayed on your terminal or electronically printed on the sales receipt with the account number embossed on the card. If they do not match, do not complete the transaction. Call your voice authorization center and ask for a "Code 10 authorization ." The card issuer may ask you to pick up the card if you can do so safely.

Card-Not-Present Transactions

For phone orders, read the account number back to the customer to verify it.

Recurring Billing

Because recurring payment transactions occur on a regular basis over time, it is possible that the cardholder's account number could be closed or could change (for example, if a new card is issued due to a bank merger or account upgrade). If authorization is declined on a subsequent recurring payment trans- action, contact the customer to obtain updated payment information.

Reason Code 74: Late Presentment

This happens when the card issuer received a transaction after the 30-day time frame and account number is blocked or closed. Usually the merchant did not deposit the sales receipt with its merchant bank within the time frame specified in its merchant agreement. Time limits are set for depositing transactions to ensure timely processing and billing to cardholders. When you hold transactions beyond the period defined in your merchant agreement (usually one to five days), you lose money, affect customer service (cardholders expect to see transactions on their Visa statements within the same or next monthly cycle), and possibly invite a chargeback. No remedies exist for chargebacks on sales receipts deposited 181 days or longer after the transaction date.

If you receive a chargeback, and the sales receipt was deposited within the 30-day time frame, ask your merchant bank to forward a copy of the receipt to the card issuer. If the sales receipt was not deposited within 30 to 180 days of the transaction date and the cardholder account has been closed, the chargeback is valid. If the sales receipt was deposited more than 181 days after the transaction date, accept the chargeback. (In this situation, the cardholder account status is not a factor.)

Deposit Timing Guidelines

Deposit sales receipts with your merchant bank as soon as possible, preferably on the day of the sale or within the time frame specified in your merchant agreement.

If you deposit paper sales receipts, ensure your staff deposits them on a regular schedule within the time frame required by your merchant bank to help prevent this type of chargeback. If you currently process deposits manually, consider the costs and benefits of a transaction data capture system at the point of sale. Transaction data capture sales terminals allow you to electronically deposit your sales transactions after you have balanced them each day. Electronic cash registers are another option. Electronic cash registers can be set up so that your transactions are automatically deposited in batches or on a real-time basis.

Reason Code 80: Incorrect Transaction Amount or Account Number

This happens when the card issuer identified the transaction amount or account number that posted as different from what is shown on the sales receipt. This usually happens when the merchant made a data entry error, i.e., keyed in the wrong amount or account number for that particular transaction.

If you are notified of this type of chargeback and if the transaction amount or account number on the sales receipt is the same as on the clearing record deposited for payment, provide supporting documentation to your merchant bank to re-present the item. If the transaction amount or account number on the sales receipt is not the same as on the clearing record, accept the chargeback. If the chargeback is due to an incorrect account number, process a new transaction using the correct one; however, do not process a credit since the chargeback already has performed this function. For incorrect-amount chargebacks, the chargeback amount will be the difference between the amount charged and the correct amount, so no further action is needed.

Reason Code 82: Duplicate Processing

This usually is when the card issuer received the same transaction more than once for posting to the cardholder's account. It usually happens when the merchant:

• Entered the same transaction into the point-of-sale terminal more than once
• Electronically submitted the same batch of transactions to its merchant bank more than once
• Deposited with its merchant bank both the merchant copy and the bank copy of a sales receipt
• Deposited sales receipts for the same transaction with more than one merchant bank
• Created two sales receipts for the same purchase

If you are notified of this chargeback, provide your merchant bank with information documenting that the two transactions are separate, or send legible photocopies of the alleged duplicate sales receipts and any other related documents, such as cash register receipts, to your merchant bank. The receipts should clearly indicate that the two transactions are not charges for the same items or services. If you have not already deposited a credit to correct the duplicate, accept the chargeback. Do not process a credit now as the chargeback has performed that function. If you identified the duplicate transaction and processed an offsetting credit before you received the chargeback, inform your merchant bank of the date the credit was issued. If your merchant bank requires other procedures, follow them. However, many merchant banks automatically look to see if a credit has been processed, so you may never see these chargebacks.

Review each batch of paper sales receipts prior to deposit to ensure that only bank copies--and not merchant copies--are included. If transactions are sent electronically for processing, ensure each batch is sent only once and as a separate batch number to help prevent this type of chargeback and take care to avoid entering the same transaction more than once.

Reason Code 86: Paid by Other Means

This is usually when the card issuer received a written complaint from the cardholder stating that he or she paid for the transaction by other means, i.e., cash, check, or other type of card. It can happen when the cardholder initially tendered a Visa card in payment for the transaction, but then decided to use cash or a check after a credit card receipt had been completed. The merchant erroneously deposited the credit-card sales receipt in addition to the cash, check, or other payment method.

If you are notified of a chargeback and the Visa card was the only form of payment tendered for the transaction, provide your merchant bank with sales records or other documentation showing that no other form of payment was used. If a Visa card sales receipt was erroneously deposited after another form of payment was used, and a credit was issued, provide your merchant bank with the date of the credit. Many banks automatically search for credits, so you may not see these. If a Visa card sales receipt was erroneously deposited after another form of payment was used, and a credit was not issued, accept the chargeback. Do not process a credit as the chargeback has already performed this function.

Reason Code 96: Transaction Exceeds Limited Amount

This happens when the card issuer received a transaction that exceeded the allowable amount from a Limited-Amount or Self-Service Terminal (including an Automated Fuel Dispenser (AFD) transaction). It can happen if the merchant processed a transaction from a limited-amount terminal and exceeded $25 or a self-service terminal (including AFD) and exceeded $50.

If you are notified of a chargeback and the transaction was less than the allowable amount of $25 or $50, provide documentation supporting transaction amount to merchant bank (e.g., copy of the sales receipt or audit tape). If the transaction amount exceeded $25 or $50, accept the chargeback. If the appropriate credit has been processed to the cardholder's account on the disputed transaction, send your merchant bank evidence of the credit. If the appropriate credit has not yet been processed on the disputed transaction, accept the chargeback. Do not process a credit since the chargeback has already performed this function. If the transaction was not conducted at an unattended terminal (i.e., Limited-Amount or Self Service) provide proof to merchant bank.

To help prevent this type of chargeback, evaluate potential risk of chargeback exposure by ensuring terminals are properly set at transaction amount limits.

Comments

Name
URL
Email	Email address is not published
Remember Me
Comments