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Merchant Card Processing Glossary
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Merchant Card Processing Glossary

Basic Transaction Guide

Reduce the risk of accepting a counterfeit Visa or MasterCard by being alert at the point-of-sale. If you know that a card is invalid, do not accept it. These simple steps can help you prevent fraud:

Step 1
When a customer presents a MasterCard or a Visa for payment, be sure to inspect the front of the card. Make sure the MasterCard or Visa account number begins with a "4" or a "5", respectively, and that the first 4 digits match the first four digits of the embossed account number. If the digits match, proceed to the next step.

Note: If the digits do not match, call your voice authorization center and request a "Code 10" for suspect cards. 

Step 2

Swipe the card only once through the terminal. The last four digits of the account number shown on the terminal or sales draft should match the last four digits of the embossed account number. If they do, go to step 3. If they do not, make a "Code 10" call.

After you swipe the card, you may get a "Call" message. In such a case, call your voice authorization center. Tell the operator you are responding to a "Call" message and follow the operator's instructions. Additionally, before completing your transaction and before the cardholder leaves, call Bankcard Services with the authorization code obtained from the call center.

Step 3
Check the back of the MasterCard or Visa while the customer signs the sales draft. The panel should have the repeated color word "MasterCard" or "Visa" printed at an angle. Also, verify that the signature on the back of the card matches the signature on the sales draft. If the panel on the card seems suspicious, and/or the signatures do not match, make a "Code 10" call.

Step 4
If the signature panel is not signed, ask the customer to sign the card. Then, ask to see a government ID, such as a driver's license or passport. When the customer signs the card, compare the signatures on the card and the ID. If the signatures match, give the card back to the customer. You've successfully completed a transaction. If the customer refuses to sign the card or the signatures on the card and sales draft do not match, make a "Code 10" call.

Step 5
After you've completed the transaction, be sure to file your sales draft. Follow these additional procedures for added security.

Store Level
Sales drafts stored at an individual store location should be organized into daily, weekly, and monthly packets. You should ensure that a draft is stored in its original location once a copy is made. Most sales draft requests are delivered and managed via mail or fax.

Close-Out Reports
At the close of business, management should review and match sales drafts to the register tapes to identify any missing documentation on a daily basis. If a document is missing, attempts should be made to locate it. If it cannot be located, this may be an indication that proper procedures have not been followed.

Randomly compare sales drafts to the register tape to ensure they match. This approach is a good way to identify problems. Change the register ribbon or paper regularly to ensure the legibility of all sales drafts.

Electronic deposits post at your bank within one banking day from the date of batch closing. The funds, however, may not appear in your account immediately if your bank did not post deposits at the end of business day. Normally, settled amount will be funded to your account within 24-48 business hours. Monthly fees will be charged during the first week of each month but discount rate and batch fee will be charged daily to your checking account. Maintain sufficient funds in your bank account to cover chargebacks/reversals and discount fees.

Credit Card Formats

A. Verify the Printed Numbers. (MasterCard, Visa)

A four-digit number, the bank identification number (BIN), may be printed on the card. It must match the first four digits of the embossed account number.

B. Compare Account Numbers. (MasterCard, Visa, American Express, Discover)

The account number embossed on the card must precisely match the 16-digit number (Amex-15 digits) printed on the sales draft or displayed on the terminal (if equipment allows).

C. Check for Valid Expiration Date. (MasterCard, Visa, American Express, Discover)

Transactions must be run before the expiration date on the card.

D. Check the Hologram. (MasterCard, Visa, Discover)

A three-dimensional hologram should appear on the card and move when the card is tilted.

E. Check the Signature. (MasterCard, Visa, American Express, Discover)

The signature on the back of the card should match the signature on the sales draft. If the card is not signed, ask the cardholder to sign on the card and make certain that the signature matches that on a valid government ID. Merchants who choose to accept unsigned cards do so at their own peril and fully accept the consequences of disputed or fraudulent transactions.

F. Check the Signature Panel. (MasterCard, Visa, Discover)

Valid signature panels are printed with the word "MasterCard", "VISA" or &ampquotDISCOVER" repeated in color at an angle. The last four digits of the account number, indent printed in reverse italics on the signature panel, are followed by a three-digit Card Verification Value 2 (CVV2-Visa, Discover) or Card Validation Code 2 (CVC2- MasterCard).

G. MasterCard

All MasterCard account numbers begin with a "5".
MasterCard's hologram consists of interlocking globes showing the continents.
The repeated words "MasterCard" will appear in the background of the hologram.

The repeated words "MasterCard" are printed in multiple colors at a 45 angle on a tamper-evident signature panel.

MasterCards have a stylized "MC" embossed on the line next to the valid date.


H. Visa
All Visa account numbers begin with a &ampquot4&ampquot.
Visa's hologram consists of a dove in flight and the last group of embossed digits should extend into the hologram.

The repeated words &ampquotVISA" are printed in color at an angle on a signature panel.
Visa cards have a stylized &ampquotV" embossed on the line next to the valid date.




J. Discover/Novus

All Discover/Novus account number begins with a "6".
The three dimensional images of the Novus coin, large and small Dean Witter and Discover and Co. logos on the hologram should appear to move when the card is tilted. The full colors of the rainbow can be seen under a light.

A scene of an ocean sunshould appear on the words "DISCOVER" and move when the card is tilted.

The repeated words "DISCOVER" are printed at a 45 angle on a signature panel.
Discover cards have a stylized "D" embossed on the line between the words "MEMBER SINCE" and "VALID THRU".

Merchant's Responsibilities

A. Prohibitions
Do not process your own personal credit card through your merchant terminal or software.

Do not require a minimum or maximum transaction amount or add any surcharges to the customer. A discount from the purchase price may be offered for payment in cash.

Do not attempt third party draft laundering (Factoring).
Factoring, depositing drafts that belongs to another business, is a violation of your merchant agreement and against the law in many states. These schemes typically result in a flood of chargebacks which lead to fund reversals from your account. Even if you own two or more locations, you must maintain separate merchant accounts and separate transactions for each location. Draft laundering will also result in termination of your card acceptance privileges. Remember, all transactions that you present to your financial institution must have been conducted directly between you and the cardholder.

Do not attempt split sales.
When a card is declined for a particular transaction amount, you may not split the dollar amount into two or more smaller amounts in an attempt to obtain authorization. Even if an authorization is received for each smaller amount, MasterCard/Visa may not recognize the authorization as valid and this can result in a chargeback if the cardholder disputes the transaction(s).

Do not retry declined transaction (excessive declines).
If a card is swiped or manually entered in the terminal and you receive a declined response, the card must be returned to the cardholder and a different form of payment must be obtained. Any transaction conducted after a card is declined, for any reason, cannot be honored and the merchant will be required to reverse the sale.

Do not attempt cash advances or disburse funds in the form of cash.
You are not authorized to process cash advances. Do not accept the credit card of a friend, relative, or employee to be used to obtain cash. If a cash advance is needed, the cardholder must take the card to a bank.

Do not list cardholders' personal information(s) on the credit card sales draft. Inscribing personal information(s) of a cardholder, such as phone numbers, driver's license or social security numbers on the sales draft can expose cardholders to unauthorized and fraudulent activities. Moreover, association rules and regulations prohibit you from refusing to accept a credit card based on the cardholder's refusal to provide additional personal information. However, you may request additional personal information(s) under the following circumstances:
a. Address and telephone numbers are requested to deliver merchandise through mail.
b. The authorization operator specifically requests additional information for MasterCard, Visa or card issuer record.
c. The signature panel of the card is not signed.
d. The card's authenticity is in question.
e. The cardholder behaves suspiciously.

Do not accept a card to collect or refinance existing debt.

Do not charge a cardholder for incidental charges such as damages to hotel rooms or rental cars without the cardholder's prior written authorization.

Credit cards are not to be used for age verification. Authorized credit card usage can be issued to all age groups.

B. Authorizations

You must obtain authorization on the transaction date and an authorization code must appear on all sales drafts. The authorization request must be for the full amount of the transaction. If a settled amount does not equal the authorized amount, or if settlement does not occur within 24hrs of the authorization, you will be assessed additional fee to non-qualified transaction. Normally, authorization code is valid only for seven (7) days from the date received.

C. Credit Refunds/Sales Draft Reversals

You must issue credit refunds through the terminal from which the original sale was processed. Refunds by cash or checks cannot be issued.

D. Return Merchandise and Adjustments

You may refuse to issue refunds, cancellations, exchanges, or adjustments of the transaction amount if proper disclosure was made at the time of the transaction. Such disclosures include:
- No return or exchange is issued with purchased merchandise. (I)
- Merchandise is exchanged only for merchandise of equal or lesser value. (II)
- Merchandise may be returned for store credit only to be used in the merchant's place(s) of business. (III)
- Other store policies may be attached on the receipt with cardholder's signature if permitted by law. (i.e., late delivery, delivery charges)

&ampquotProper disclosure at the time of transaction" means that the following or similar wording must appear legibly on all copies of sales draft, in letters at least 1/4 inch in height and close to the signature:
As it relates to (I) - "NO REFUND", &ampquotNO EXCHANGE"
As it relates to (II) - "EXCHANGE ONLY"
As it relates to (III)- "IN-STORE CREDIT ONLY"

E. Retention and Storage of Sales Draft Documents
Sales draft originals, microfilm copies, and substitute drafts must be retained for three (3) years from the transaction date.

F. Card Truncation

In many states, newly installed devices that electronically transaction receipts are prohibited from printing more than the last 5 digits of an account number and are further prohibited from printing expiration date on customer receipt.

G. Required Information on all Sales Draft

- Business Name
- Business Location and/or Website Address
- Transaction Amount
- Transaction Date
- Card Number
- Card Expiration Date
- Cardholder's Signature and/or Name
- Authorization Code
- Reference (ticket, item or trace) Number

H. Changing Merchant's Information

If there is/are any change(s) of business name, address, phone number, bank account, ownership of business, sales method or products being sold, you should contact Bankcard Services. All of these items require prior approval to ensure a smooth operation of your processing account.

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