hat is Chargeback Arbitration?

When a bank, cardholder or merchant can’t resolve a dispute on their own, you may advance along the process to the chargeback arbitration stage. During this stage, a card representative will review your case and make a final judgement.

How Does Chargeback Arbitration Work?

Chargebacks give cardholders the right to dispute transactions.

What happens if you don’t agree with a chargeback?

In the event that you want to dispute a chargeback, you can challenge it through a process called representment.

Just like a court case, you will be required to provide evidence to counter the chargeback during representment. Without sufficient or strong enough evidence, the cardholder’s issuing bank may reject your case and file a second chargeback, otherwise known as a pre-arbitration chargeback.

What happens if you don’t want to accept the second chargeback?

You do have the option to appeal a second chargeback and an arbitrator from the card network will review your case. The cardholder must accept or deny the motion for arbitration. If the cardholder accepts, the case goes into arbitration for a final decision.

It’s important to know that if a dispute makes it to the arbitration stage, it’s likely that the outcome won’t be favorable for you as a merchant.

How to Prevent Chargeback Arbitration

A chargeback arbitration prolongs the dispute which means you will incur additional fees and time spent on your dispute.

Chargeback arbitrations should be avoided and should only be looked at as a last resort. To avoid chargeback arbitration, it’s recommended that you avoid chargebacks altogether.

Need Expert Help?

We can help you identify chargeback prevention strategies for your business so that you can minimize your risk. For more information, get in touch with us here.

If your business depends primarily on online orders,then perhaps you’ve come across the acronym AVS. AVS stands for “AddressVerification System” and it is a fraud prevention tool used to verify thebilling address provided by the customer with the address on file with thecredit card issuing bank. AVS checks the numeric portions of the address—likestreet number and zip code—in order to return a verification. Sometimes thisresults in false positives or negatives which may result in having to do amanual override, but overall it is a good means of preventing fraud.

Additionally, making sure to use AVS can also affectyour interchange rate! Credit card companies like to see merchants taking theinitiative to protect against fraud, and merchants who capture AVS data canreceive lower interchange rates. Overall, it is a good idea to institute apolicy of AVS, especially if you’re a merchant that relies on card-not-presenttransactions.

The codes for AVS are alphabetical, and some are cardbrand-specific. The codes are:

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An interchange rate is the rate a card network charges to cover the risk of doing business. All credit transactions involve risk because no physical currency is being exchanged, and an interchange rate is calculated to mitigate that risk incurred from fraud and the threat of the card network not being paid back by the cardholder as much as possible. Interchange rates are paid whenever a merchant processes a transaction and is usually presented in the form of a percent plus a few cents per transaction. Interchange rates are not regulated by any government entity, so they are set by the card networks themselves.

These interchange rates do change, twice a year in fact, and are generally released in April and October. This is because the payment processing industry is always evolving, and card networks have to keep up with spending trends. The rates don’t always increase, sometimes they decrease or remain the same, depending on several factors the card network considers and their judgement of the market.

The factors that go into the decision to adapt interchange rates include the risk of fraud, the rewards card networks offer cardholders, the cost of the transaction, and the industry in which the purchase is being made (example: a concert ticket is high risk, so it would have a higher rate than, say, a low-risk purchase of a meal at a restaurant). Payment processors add their own markup to cover their own risk of doing business.

Visa and MasterCard’s interchange rates are available to the public, without processor markup, so you can always stay up to date and informed when choosing your payment processor. Visa’s rates can be found here and MasterCard’s are here. To help merchants keep more of the money they earn so their business can grow, PayArc offers one of the best deals in the industry for low-risk businesses, so contact us today to find out if your business qualifies!

ncryption & PCI Compliance

Surely you’ve heard about skimmers being placed on gas station pumps or similar, of criminals trying to capture credit card information. PCI-compliance helps merchants avoid potentially dangerous situations like these. Staying PCI-compliant should be a primary concern for any merchant. Security breaches can spell disaster for businesses large and small, as recent headlines have made clear. For that reason, card networks expect merchants to comply with the PCI-DSS to keep everyone from cardholders to the card networks themselves safe from fraud.

Encryption is one such way to keep cardholder data safe. The practice of encryption is a great security measure because…

• The practice helps keep merchants PCI-compliant
• Encryption makes it much harder for cybercriminals to steal data, protecting cardholder, merchants, processors, and card networks from fraud
• Encrypted data requires a decryption key to access, so until the encryption is unlocked the data is safe

How Encryption Works

Like tokenization, encryption converts the card data into an indecipherable code. However, unlike tokenization, the encrypted data but be decrypted (using a randomized decryption key) in order to be used. While a token can be used as is, encrypted data must be “unlocked” to be usable. Only authorized users have the decryption keys necessary to read the data, and these keys change often to guard user data.

While the magnetic stripe on the back of a credit card is encrypted, it is fallible to skimmers. An EMV chip also contains encrypted information, and each transaction is encoded differently, making it safer. EMV (Europay/MasterCard/Visa) chips were introduced in the U.S. around 2014, after several hacks of big-name retailers made consumers wary of credit card transactions.

PayArc and Encryption

PayArc offers an encryption service as part of our PCI-compliance program for merchants. This program is made possible through our partnership with ControlScan, a leading IT security service. PayArc and ControlScan are dedicated to the protection of your customers’ card data, and we will help you every step of the way to make sure that goal is met.

Usually, when a merchant account is terminated, the merchant’s name and business is listed on MATCH—Member Alert to Control High Risk. Ending up on MATCH is the nightmare of legitimate merchants. This is because finding an individual’s name on MATCH means that most processors will not approve a different merchant account with the same owner due to the higher risk of potential for fraud.

What is MATCH/TMF?

MATCH (previously known as TMF, or Terminated Merchant File), is a database of merchants used by payment processing companies that contains information on merchants and individuals whose accounts have been terminated. Payment processors check MATCH for each new potential account to mitigate their own risk and keep their business safe. Once a merchant or individual is on MATCH, it is very difficult to be removed and very unlikely that another merchant account will be approved for processing.

Why Would A Merchant Account Be Terminated?

There are several reasons as to why a merchant account would be terminated:

Placing a merchant or an individual on MATCH is not a decision that an acquiring bank or payment processor makes lightly, so if you’re not committing fraud you are probably safe. MasterCard and Visa both have penalties in place for acquiring banks and payment processors who not comply with their regulations—both for placing merchants on MATCH and for failing to do so. However, mistakes do happen, and if you believe that you have been placed on MATCH in error be sure to speak with an attorney who has experience in the credit card industry.

In the age of online shopping, credit card brands have had to get serious about security. One solution they’ve rolled out is the CVV-–the Card Verification Value. You’ve probably used this feature as a customer yourself! This is a 3-digit number on the back of the card that is used to prevent fraud in the case of online orders (Note: American Express cards have a four-digit code on the front of the card instead). This code is entered onto the checkout page on the website and authorizes the transaction.

What Is CVV2?

CVV2 is just CVV, although is refers explicitly to the three digits on the back of the card which was developed for online usage of the card. The original CVV is encoded into the magnetic stripe. Similarly, Discover and American Express use the acronym CID –Card Identification Number, but the intent is the same as the CVV.  

How Does the CVV Protect Against Fraud?

When companies have their data compromised, customer card information can end up on the “Dark Web” where criminals can then buy the information. CVV offers an extra layer of security that is meant to protect against fraud where the card thief purchases the card number online, and because they are not in physical possession of the card and they cannot know the CVV number.

Business Impacts

Merchant portfolios may need be reviewed to prepare profitability models that support these interchange rate changes.

Mastercard

Canada Region

Enhancements to Interregional Interchange Programs

Mastercard is enhancing interregional interchange programs for the Canada region and is reclassifying consumer credit product code MSP-Muse Mastercard to Consumer Super Premium, in addition to expanding Canada acquiring to consumer Super Premium products.

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US Region

New Consumer Debit Product Code

Mastercard is introducing a new consumer debit product code, MCI-Mastercard Select Debit,in the Debit Mastercard (DMC) acceptance brand for the U.S. region and will be adding this new product code to existing interchange programs.

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Expanded Use of Existing Consumer Debit Product Code ACS

Mastercard is expanding the use of existing consumer debit product code ACS-Digital Debit to existing interchange programs where product code MDS-Debit Mastercard Standard exists.

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New Mastercard Enterprise Solution Wholesale Travel Program Product Codes

 

Mastercard is expanding the Wholesale Travel Program by introducing 5 new commercial B2B credit product codes. These new B2B product codes will be added to existing interchange programs. The existing Wholesale Travel Program is being renamed to support the changes as Mastercard B2B Product.

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Discover

New Card Product Type for the Commercial Prepaid-Reloadable for the IIN Range

Discover will implement a new Product Type value, 015, for the Commercial Prepaid-Reloadable for the Issuer Identification Number (IIN) range.

he Next Level in Preventing Credit Card Fraud

In recent years, new headlines involving security breaches of big companies like Target and Uber have placed the methods by which the payments industry protects consumer data under public scrutiny. Merchants and processors have the responsibility to keep cardholder information safe, although it is increasingly hard to do so in today’s world. Enter card tokenization: the next step in protecting customer data and keeping merchant reputations safe. Customers who use mobile wallets already get the extra protection of this technology—making mobile wallets the most secure form of electronic payment.

Card tokenization is a great security measure because…

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What Is A Token and How Does It Work?

A token is a series of randomly generated numbers (or numbers and alphabetic characters, depending on the type of tokenization program). This string of random characters replaces a customer’s actual card data. Then, the customer’s data can be stored and used just as if it were the actual card, however, the token has no value outside of the payment acceptance system and makes no sense to a potential card thief. This means that if there is ever a breach in security, the tokens are unusable to cyber criminals.

PayArc and Card Tokenization

PayArc’s risk management program provides merchants with the option to tokenize their customers’ data, among other security measures. Once the card data is entered into the payment system through any method of payment, that data is tokenized. This works for both card-present and card-not-present transactions. This means that we can give both merchants and customers much-needed peace of mind, and we can help merchants stay PCI-Compliant.

f you run a restaurant, you probably don’t have time to think too much about credit card processing rates. However, understanding them can only help your bottom line. Mastercard has specific categories of interchange for restaurants, depending on what type of consumer credit card is used. Core and Enhanced Value credit cards do not receive these rates, but credit cards that offer rewards, like World, World High Value, and World Elite, do. Debit and prepaid cards also receive restaurant rates. In order to receive these rates, the restaurant must be registered under the MasterCard Codes of 5812 (restaurant) or 5814 (quick-serve merchant).

The rates for consumer credit cards are as follows:

Alternatively, the restaurant rate for a debit card is 1.19% + $0.10, and the rate for a prepaid card is 1.19% + $0.10.

There are other qualifications required to receive these rates as well. For example, the transaction must be a “card present” transaction, you must authorize and settle the transaction within 1 day, obtain 1 valid electronic authorization, and consumer credit cards must have a transaction total of $60.00 or less. If the transaction is over $60.00, then the interchange category changes to travel and entertainment, or T&E.

If you accept credit and debit cards, you most likely accept Visa. Being the most popular card worldwide, you would be remiss not to. Visa’s rates are available here to the public, but since they can be somewhat confusing we’ll go over them in this article.

Visa has eight categories for interchange rates: Consumer Check Card, Consumer Prepaid, Consumer Credit, Corporate and Purchasing, Corporate and Purchasing Prepaid, Business, Other, and International.

Visa USA Consumer Check Card

Visa divides their debit interchange program into two categories: Card present and card not present transactions. Then, it further divides cards into “Exempt” and “Regulated” categories from there. The difference between regulated and exempt debit is the amount of money the issuing bank has in assets. If the issuing bank has more than $10 billion in assets, the debit card is considered “regulated,” and if the issuing bank has less than $10 billion on assets, the debit card “unregulated,” or exempt.

The card-present rates are in the table below:

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Card-not-present rates:

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Visa USA Consumer Prepaid

Similar to the consumer check card, the consumer prepaid is also divided into exempt and regulated cards, and card-present and card-not-present transactions. The following table shows the card-present Visa interchange rates for the consumer prepaid card:

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Additionally, the following table shows the card-not-present rates for the Visa consumer prepaid card:

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Visa USA Consumer Credit

Visa’s Consumer Credit program’s interchange rates are dependent upon the industry in which the purchase is being made and the type of Visa card used. For example, a purchase made in a supermarket with the Visa Signature Preferred card would have an interchange rate of 2.10% + $0.10, while if that same supermarket purchase was made with a Traditional Rewards card the rate would be 1.65% + $0.10.

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Visa USA Corporate and Purchasing

The interchange rate for Visa’s Corporate and Purchasing program is dependent on whether the transaction belongs to the Commercial fee program or Government fee program, as shown in the following table:

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Further, there is also an interchange rate that applies to STP, or Straight Through Processing:

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Lastly, the Large Purchase Advantage Fee Program also applies to the Corporate and Purchasing card:

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Visa USA Corporate and Purchasing Prepaid

The Corporate and Purchasing Prepaid interchange rate is subject to five fee programs and whether the card is an exempt corporate prepaid, an exempt purchasing prepaid, or a regulated commercial prepaid:

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Visa USA Business (Excluding Prepaid)

The Business Credit Fee Program interchange rate is dependent on the spending tier, as shown in the table below:

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The Business Debit Fee Program is dependent on whether or not the card is exempt or regulated:

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Visa USA Other Transactions

Visa has interchange rates for transactions categorized as “other,” such as Credit Voucher transactions, Prepaid Loan Service Network, Money Transfer, Cash Disbursement transactions, and Other ATM Non-Cash Disbursement Transactions. These interchange rates are outlined below:

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Visa USA International Transactions

Finally, Visa has interchange rates for international transactions—rates for Visa cards used at a US merchant but issued outside of the US. These rates are dependent upon the type of card, as shown below:

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