Authorization Responses

An authorization is a request for verification that the cardholder’s account is in good standing with funds available at the time of the request. For most merchants, the authorization is obtained during the sale transaction.  It does not warrant that the person presenting the card is the rightful cardholder, nor is it a promise or guarantee the sale will not be subject to a chargeback. The following are some examples of responses received from the card issuers.

• Approved - Transaction is approved by issuer/company that governs the payment card
• Referral - Message indicating that the merchant must call their authorization center and follow instructions provided. Note: When a referral response is received the merchant should not attempt additional authorizations on the same card. The merchant should call the authorization center to receive a voice approval code to complete the transaction. A voice authorization should only be requested when a referral response is received. If the merchant receives an unfavorable response, another form of payment should be requested.
• Declined - Transaction was not approved by issuer/company that governs the payment card. The transaction should not be completed. Request another form of payment. Note: If a sale is declined, do not pursue alternative measures with the same card to obtain approval. Instead, request another form of payment. Merchants accepting and processing transactions with multiple authorizations are subject to chargebacks, Payment Card Company fines and/or cancellation of their processing agreement
• Pick Up Card - Card issuer wants to recover the card. Do not complete the transaction. Ask for another method of payment and if you feel comfortable recover the card from the cardholder. Note: Follow your internal procedures for card recovery

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5 Factors For Banks To Consider When Choosing A Payment Processing Partner

Banks can derive powerful benefits by partnering with a top-notch payment processor. But financial institutions that don’t vet those partners with due diligence may inadvertently invite problems. 

There are five key considerations to explore when selecting the right payment processing partner, and these can help ensure a more rewarding and value-adding relationship;

1.) Experience Serving Banks

Banks are advised to seek out a payment processor with a proven and verifiable track record of successful bank partnerships. Experience in the nuances of banking, coupled with an understanding of the needs and preferences of merchants who rely on banks, is essential. Otherwise a bank’s vital merchant relationships may be jeopardized because of the payment processor’s lack of knowledge, resources, and vision. A qualified payment processor will anticipate what a bank and its merchants require. Then it will offer customized solutions to help ensure stability, profitability, and growth.

2.) Robust Security

Proactive risk management is priority number one for banking institutions. Don’t let a processing partner who isn’t vigilant compromise security. When vetting a payment processor, make sure they are expert at guarding against potential data breaches. They should use all the latest payment protection technologies such as data encryption, tokenization, PCI-compliant Level 3 processing, and access-restricted cloud backup. They should also know how to accommodate the needs of businesses within regulated industries. Law firms, for example, need a payment system that supports approved escrow accountability. Healthcare providers must ensure airtight HIPAA compliance. A qualified payment processor will stay updated on compliance issues, technological solutions, and best practices. They’ll also facilitate ongoing payment system security training for bank personnel and partnering merchants.

3.) Specialized Public Sector Solutions

A partner with creative solutions for government agencies, municipalities, and educational institutions is a great asset. They can open up new opportunities for banks to pursue those potentially lucrative accounts. For example, a flexible rate payment system, which utilizes industry-compliant legal surcharging, can ensure that the organization never again has to pay credit card “swipe fees” to companies like VISA and MasterCard. Overhead is significantly reduced, net revenue is increased, and flex-rate payments build public trust through greater financial transparency and equity.

4.) Strategic Consultation and Collaboration

Always demand that a payment processing partner does more than simply sell products and services to the bank. Look for one that will become a long-term solution-focused success collaborator. Their support and innovation should improve the bank’s customer service to help attract and retain merchant accounts. Banks who choose a superior payment processing partner can reduce in-house labor and overhead, while expanding their merchant account portfolio and market share.

5.) Flexibility and 24/7 Support

A B2B payment platform should be designed exclusively for B2B and be able to process multiple payments simultaneously, in a variety of currencies, with instant electronic invoices and receipts. Choose a partner with dedicated, personalized support that is not outsourced to a third party and extends around the clock, even on bank holidays. Then enjoy the competitive advantage derived from having a technologically advanced, strategically innovative, and highly responsive payment processing partner. Source

Credit Card Processing Fees and Costs

Whatever pricing structure they use, processing companies base their pricing on four primary fees. These include interchange fees, assessment fees, processor markup fees and monthly account or statement fees. Knowing what goes into credit card processing fees can help you understand your options and spot the best payment processing service for your business.

Interchange Fees

Interchange fees are set by Visa, Mastercard, Discover and other card brands. These are the unavoidable, base-level costs of processing credit cards. Often called wholesale or base fees, interchange fees generally range from 1% to 2% of the transaction amount. Payment processing companies collect interchange fees during the transaction process. They then transfer these funds to issuing banks as payment for the credit service.

Interchange rates vary greatly and depend on the merchant’s industry, the transaction type and the brand and type of card used. Here are a few examples of factors that impact interchange rates merchants pay to process credit cards.

• Transaction type: Card-not-present transactions, such as online sales, have higher interchange rates than in-store sales, where cards are physically swiped.
• Debit vs. credit card: Debit cards have lower interchange rates than credit cards because they are considered a lower credit risk.
• Card brand: Discover and American Express have higher interchange rates than Visa and Mastercard.
• Card type: Rewards, corporate and governmental purchasing cards have higher interchange rates than non-rewards cards since these programs cost the issuing banks more to administer.

Assessment Fees

Assessment fees, often called per-transaction fees, are also set by the card brands. These are flat per-transaction fees attached to interchange fees and typically range from 1 to 5 cents, based on the type of card and transaction.

As with interchange fees, assessment fees are collected by card processing companies during the transaction process. However, these fees are paid to the card associations, such as Visa, Mastercard, Discover and American Express, not to the issuing banks.

Processor Markup Fees

Markup fees are what credit card processing companies charge for their processing services. Markup fees vary based on the card company’s processing fee structure, such as a straightforward markup percentage called interchange-plus, complex tiered rates or simple flat-rate fees.

Each fee structure has benefits and drawbacks, which we explore in more detail below. Bottom line, markup costs vary greatly from processor to processor, so it’s essential to shop around for the best deal.

Monthly Fees

In addition to markup fees, many credit card processing companies charge monthly fees for specific services, such as statements, online gateways, PCI compliance and card terminals and other processing hardware. Some roll all of these services under a monthly account or subscription fee.

A few charge no monthly fees for credit card processing services. However, these providers typically have higher flat-rate processing fees that can cost more compared to providers that combine monthly fees with lower processing rates.

Other Costs To Consider

Some credit card processing companies have add-on and conditional fees that can affect your overall processing costs. To avoid surprises on your monthly statement, always check the fine print for add-on fees when comparing credit card processing companies.

• Chargeback fees: Unfortunately, chargebacks are an inevitable part of accepting credit cards and the cost of processing a chargeback varies greatly among processing services.
• Batch processing fees: Some tiered and traditional merchant services providers charge per-batch fees.
• Setup or termination fees: Card processing services with negotiated or tiered rate plans often require contracts with setup costs and hefty early termination fees.
• Monthly minimum fees: Some negotiated and tiered rate plan providers charge a monthly fee if contracted transaction volume minimums aren’t met.
• Same-day funding fees: Most card processing services deposit funds within one to two business days with no added fees but charge a fee for instant or same-day access to processed funds.