Card Present & Card Absent Best Practices

Facilitator: Kristy A Stanley

Fraud and Compliance Officer

June 16 2011

Legal Disclosure These materials are provided for informational purposes only and should not be

relied upon for marketing, legal, regulatory or other advice. You should independently evaluate all content and recommendations in light of your specific business needs, operations and policies as well as any applicable laws and regulations. Caribbean Credit Card Corporation Ltd. is not responsible for your use of these materials, including errors of any kind, or any assumptions or conclusions you might draw from their use.

Use of the following information is the sole and exclusive responsibility of the user.

Card Present and Card not Present Best Practices The issue of credit/debit card fraud

presents the single most important challenge to our business

Risk FactorsOpening up of the region to international travelGrowth of the credit/debit card business will

attract persons who know our vulnerabilitiesIncreasing travel by cardholders

Common StandardsPlace Decals on the door, window & cash

registers of your business

Accept all Qualified cardsThese cards may look different but they all

Have the same basic card elements and security features, and

Guarantee payment to you when acceptance procedures are correctly followed.

Common Standards

- No surcharging - Process reversals not refunds - Deposit transactions for your business only- Deposit transaction receipts within 5

calendar days of the transaction.

Common StandardsDo not set minimum and maximumsInclude taxes in the sales draft

If you are required to collect local taxes, these should be included in the total transaction, as it appears on the sales draft

Do not offer cash refunds for transactionsReturned goods or cancelled servicesOffering refund vouchers for refund and

adjustments protects you from loss through fraudA Fraudster, using a stolen or counterfeit card,

could purchase goods and return them for cash

Authorization Request authorization for ALL

purchases and cash advance transactions ( bank only).

When the card won’t swipeUsually means one of three things: • The terminal’s magnetic-stripe reader is not

working properly, • The card is not being swiped through the reader

correctly, or • The magnetic stripe on the card has been

damaged or demagnetized.

Authorization Merchants should take the following

steps: • Check the terminal to make sure it is working and that

you are swiping the card correctly. • If the terminal is okay, check the card’s security features

to make sure it is not counterfeit• If the problem appears to be the magnetic stripe, follow

merchant procedures, which may include: Key-enter transaction data for authorization or Call voice-authorization center

• For key-entered or voice-authorization transactions, make an imprint of the front of the card. The imprint can be on the terminal sales receipt or a separate manual sales receipt. Either way, it should be signed by the customer.

Transaction AdjustmentsSplit Sales (Cash, Check, two cards)

If more than one card, each with a different account number, is being used, you must use a different sales draft for each card.

If payment was made with card and cash or check, keep separate receipts indicating such together

Exchange of goods of greater valuePrepare a sales draft & seek authorization for the

difference in costExchange of goods of lesser value

Prepare a refund voucher for the difference in cost

DO NOT ACCEPT THE CARD If the card is invalidIf you suspect that the card may be altered or

counterfeitIf the number shown on your magnetic card

reader or printed by the electronic point-of-sale terminal does not match the number on the card

Staff TrainingMerchant staff must be trained on the proper

card acceptance procedures including how to recognize Visa & MasterCard security features

Keep your staff up to date with training material provided by your bank. Training improves customer serviceTraining reduces losses and risks

Your employees should also know what to do if they have any reason to be suspicious

Merchant ProceduresFollow card acceptance procedure for card

not present transactions.

For recurring transactions:Use the “Doing Business As Name” in all correspondence

with the cardholder.Inform / provide cardholder of third party payment process

agent nameBilling amount on the card statement should match the

amount agreed with the MerchantShipping charges addedEnsure goods or services are delivered in the timeframe

agreed

Merchant ProceduresProvide a Customer Service contact phone

number or email

Clearly state merchant termination/cancellation policies in Cardholder agreementMarketing material, website

Clearly inform cardholder upfront of the billing arrangements and all charges

Act promptly to Cardholder instruction to cancel a recurring payment

Merchant Category CodesHotel and LodgingAutomobile Dealers

Hotels

ReservationsAsk for

Cardholder’s name, account number & expiration date Optional - Manual Authorization / Advance Deposit

No show Fraud Prevention

Inform Cardholder of rate, including taxes, Advance deposit exact name and address of hotel reservation confirmation code

HotelsReservations

Explain to Cardholder The cancellation policy, Reservation is guaranteed until check-out time on

the day following the scheduled arrival date Hotel “No show” policy & rate

(one night’s lodging, including taxes)

Contact the bank to obtain issuer information (telephone number) in order to complete name and address verification prior to processing the authorization.

HotelsCheck In

Confirm length of stay Verify name of Guest with Name on Card*Request manual authorization for total

accommodation during the first nightIf an advance deposit was processed, this

amount should be deducted from the total transaction amount

Check OutYou do not need to request a new authorization if

the final transaction is less than the sum of all authorized amounts, plus 15%

Cardholder signs total invoice

HotelsHandling No-Show

Transaction receipt should include the words “No-Show” on the signature line of the transaction receipt

Handling Over-BookingIf guaranteed accommodation is not available

when the Cardholder arrives, you must provide the Cardholder with the following services at no charge Comparable accommodations for one night at a Hotel at

least of the same quality Transportation to the alternative Hotel Forwarding messages and telephone calls received to the

alternate Hotel If requested, a 3 minute telephone call

Car Rental AgenciesVerify name of Customer with name on Card Request authorization before the Cardholder

departs with the vehicleValid for the entire rental periodDO NOT include potential damages or loss of

the rental vehicle. (Process transaction separately and obtain a signature.)

Car Rental AgenciesWhen should you request a new

authorizationIf cardholder extends rental period and the

revise amount exceeds the original authorization by 15%

If legitimate additional charges exceeds the original authorization by 15% Fuel Used, Additional rental fees, Insurance,

Damages, Parking tickets/ other traffic fines

Ensure that Agreement covers all additional charges / insurance policy and is signed by the cardholder

EXAMPLEThe actual transaction is $500.00. As shown below, this is morethan the previously authorized amount plus 15%.Previously authorized amount $350.0015% added 53.00Total $403.00In this situation, an additional authorization is necessary.$500.00 – $350.00 = $150.00ACTUAL PREVIOUSLY YOU MUST OBTAINTRANSACTION AUTHORIZED ADDITIONAL AUTHORIZATIONAMOUNT FOR THIS AMOUNT**The total sum of the additional authorization amount plus thepreviously authorized amount must equal the actual (or final)transaction amount.

Conclusion Payment card fraud may never be eliminated however through:

Adherence to the industry best practicesContinuing merchant awareness

Payment card fraud losses may be minimized.

Questions and Comments

Thank You for your time and

attention