Category: Payments

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Help! What Do I Do with Transaction Declines and Blacklisted Transactions?

Constellation Payments |

Declined. Seeing that word flash on your payment terminal, or on a transaction report, is sure to stir up angst in anyone.

But don’t fret.

You’ll be happy to know that with a little education, research, and action, every decline can be resolved. That’s right. Every. One.

Some of the most common declines you’ll see:

  • Authorization revoked
  • No account
  • Card stolen
  • Invalid card number
  • Insufficient funds
  • Card expired
How Should You Handle These Declines?

Some declines are of a softer nature, and are set to detect and prevent fraudulent activity, such as not passing the address verification service (AVS) check.

By collecting needed information, like an updated address or card verification value (CVV), you can simply reattempt the transaction through your software, and most often, the reattempt will be successful.

Other declines may require action by your staff and/or customer. You’ll need to ask your customer to contact their bank to resolve the issue for an authorization revoked decline before the transaction can be retried. For declines such as invalid card number and card expired, you’ll need to ask your customer for an updated card or payment method.

Blacklisted Transaction Report – Make Regular Review Part of Your Business Regimen

It’s important to note that once a transaction is declined, and it isn’t resolved by you or the customer, the transaction can be placed on a blacklist by Constellation Payments’ system.  These transactions are listed as blacklisted transactions and are reported back as such with the return response and the specific action required to update your customer’s account.

This process was created because reattempting transactions on an ACH account that’s blocked due to invalid or incorrect payment details can result in banking fines from the National Automated Clearing House Association (NACHA), or you, the merchant, could be charged excessive authorization charges for pushing repeated declined transactions. The Blacklisted Transaction Report helps ensure you aren’t fined for accounts you’re never going to get funds on.

By running and working the Blacklisted Transaction Report, you can be proactive and take the necessary steps to resolve your declines and reduce your decline ratio.  

This report can be retrieved through our reporting API or reported by your batch returns file.

The Big Takeaway

It’s not uncommon for a merchant’s declines to balloon due to repeat attempts on the same payment method.

The best course of action you as a merchant can take is to put more awareness around your declines and use the Blacklisted Transaction Report. By reviewing the reports regularly, and taking actions listed on the Blacklisted Transaction Report, you’ll reduce your declines, and ensure successful processing going forward.

We Can Help

We’re happy to review your declines and Blacklisted Transaction Reports to help create a plan of action for you to reduce your declines. Just give us a call at 888.244.2160 or send an email to sales@csipay.com.

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Best Business Practices: 3 Tips for Effectively Handling Credit Card Chargebacks

Constellation Payments |

If you take credit card payments at your business, you will, inevitably, at one time or another, face a chargeback. And resolving those chargebacks can eat up a huge amount of time and resources — something most small businesses don’t have much of.

The good news: with a little preparation and education, you can put practices in place to make the chargeback process a lot less painful — and way more effective. 

So, you got a chargeback notice. Now what? Follow these best practices:

1. Check the reason code

When you receive a chargeback notice, the very first thing you’ll want to do is check the reason code. The reason code will give you valuable details on the reason why the customer decided to dispute the payment in the first place.

Not only will this help you understand why the customer is disputing the payment, it may provide insight into how to prevent chargebacks for your business going forward.

For instance, one of the most common reasons for a chargeback is that the customer doesn’t recognize the charge on their statement. If that’s the case, you could consider using dynamic descriptors to make sure your charge descriptions are ultra-clear.

Side note: Dynamic descriptors allow a merchant to define what appears on their customer’s credit card statement regarding the purchase. You can include specifics like the product purchased, business name, business location, and contact information. An example of a dynamic descriptor would be: ABC Inc. Annual Membership Renewal 8885551212 versus a static descriptor like: ABC Inc. 8885551212.

2. Make note of important deadlines

After checking the reason code, you’ll want to make note of any important response deadline, since there is a limited timeframe to respond to a chargeback.

The typical timeframe to respond to a chargeback is 120 days; however, in some cases, the timeframe may be longer or shorter depending on the chargeback reason code.

Making note of the deadline to respond is useful in that it helps ensure you don’t miss the window to go to the dispute process, if that is how you decide to proceed.

3. Consider resolving through proactive customer service

Most times, a chargeback request is initiated by a frustrated customer that couldn’t easily recognize where the charge is from.

Before proceeding to the dispute process (a process that involves you, the merchant, having to provide proof that the transaction is valid and can also mean extra processing time and cost to you, and possibly a loss of revenue), consider taking a moment to contact the customer directly to resolve the problem.

Most times, the dispute process can be avoided by contacting the customer. Customers will appreciate that you took the time to proactively contact them and hear them out, and the customer will, most likely, reverse the chargeback by contacting their card issuer.

Again, this proactive contact could go a long way in not just providing stand-out service to your customer, but alerting you to issues that’ll help you prevent chargebacks from happening in the first place.

Chargeback prevention is just as important

While handling chargebacks in the most effective manner is important to your business, it’s also hugely important to put practices in place to prevent a customer from charging back a payment. For chargeback prevention tips, check out our blog article: 7 Ways to Proactively Prevent Credit Card Chargebacks.

If you’d like more information on chargeback prevention, and how Constellation Payments can assist, don’t hesitate to give us a call at 888.244.2160.

Last, but not least, sign up for chargeback alerts

How can you respond to chargebacks if you don’t know a chargeback occurred?!

A great layer of protection for your business is to sign up for chargeback alerts that notify you of any payment disputes posted to your account within 24 hours. You can choose to be notified by fax, or have the chargeback alerts sent by email and online alert. Setting yourself up with chargeback alerts helps ensure you can begin proactively handling chargebacks as soon as they occur.

To sign up for chargeback alerts, contact our Merchant Services Support team at 888.244.2160.

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What’s the Visa and MasterCard Purchase Return Authorization Requirement? A 1-Minute Rundown

Constellation Payments |
Global POS photo

Just as you are required to obtain an authorization that gives approval to process a sale, starting April 2020, for Visa and MasterCard purchases, merchants will be required to obtain an authorization for a return/refund.

Why is this happening? What are the benefits of authorizing a return?

Historically, returns and refunds did not require an authorization. Returns and refunds were simply processed when a batch was settled. 

Authorizing a return has multiple benefits for the customer, as well as for you, the merchant. 

Customer Benefit: the main benefit will be the clarity customers have into the refund being issued. The new return authorization process will improve customers’ overall experience and help facilitate customer service inquiries related to the status of refunds.

Merchant Benefit: The new return authorization process will give merchants the ability to check the validity of the card to process the refund. Merchants will also receive an approval or decline response code at the time the refund is being issued. This process will, in turn, reduce chargebacks and fraud by providing proof that the refund in now in progress.

Some Response Codes include:

Approved

Code 00 | Approval
Finalize the refund and credit the account.

Code 85 | No reason to decline
This can also be considered an Approval. Finalize the refund and credit the account. 

Declined

Code 14 | Invalid account number or account type
The account for this card is not recognized. Tell the cardholder that the bank doesn’t recognize the account. Request an alternate card of the same brand type (If the refund is on a Visa, then request an alternate Visa card. If the refund is on a MasterCard, then request an alternate MasterCard.)

Code 57 | Transaction not permitted to cardholder 
This response code could be triggered due to a pre-paid card that doesn’t accept refunds. Request an alternate card of the same brand type for payment, or a different form of payment such as cash. 

When do these changes go into effect?

The Visa and MasterCard Purchase Return Authorization requirement is mandated by April 14, 2020.

As of April 14, 2020, issuers (the bank or credit union that issued the credit/debit card to your customer) will be able to initiate a chargeback on a return transaction that does include an authorization.

It’s important to note that the issuer holds the liability for an authorized return sent for settlement. The merchant holds liability for an unauthorized return sent for settlement. 

When can I expect the returns process in my POS software to be updated?

Our next payment gateway release is scheduled for Fall 2019. Within this release will be new functionality that will enable you to obtain an authorization for your returns/refunds through your POS software.

In other words, when initiating a return or refund in your software, you’ll receive a response code as listed above. This process will help provide fraud protection and chargeback prevention as you’ll be able to check the validity of the card being used to process the refund. 

Have more questions about the upcoming Purchase Return Authorization Requirement, or how our payment solutions can help you run your business more efficiently? Give us a call at 888.244.2160 or post your question below. 

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Form 1099-K: What Business Owners Need to Know

Constellation Payments |

Receive a 1099-K form? Not sure what it is or what it’s used for? Here’s a brief overview to get you quickly up to speed and in the know this tax season.   

What is a 1099-K? 

Form 1099-K, also called Payment Card and Third Party Network Transactions, is an IRS information return form that is used to report transactions that are made by a payment settlement entity.   

In other words, if you use a service, like the payment processing provided by Constellation Payments, a third-party processor to process your credit cards and debit cards online, the transactions that were processed by the payment settlement entity are reported on Form 1099-K. 

Who is Issued Form 1099-K? 

Form 1099-K forms are mailed to our customers via USPS and are sent to the same address where monthly statements are sent. 

A copy is simultaneously sent to both the IRS and the merchant.  

It’s important to note that not all business owners who process credit card and debit card payments online are issued a 1099-K. There are minimum reporting thresholds. In most cases, a 1099-K is not issued unless: 

The payment settlement entity processed more than $20,000 worth of payments on behalf of the merchant annually, AND the payment settlement entity processed more than 200 individual transactions on behalf of the merchant annually. 

What Should I Do with My 1099-K? 

Form 1099-K should be used when preparing your annual tax return. According to the IRS, separate reporting of the transactions on Form 1099-K is not required.  Be sure though to add the income that is reported on your 1099-K to your total business income when you file your taxes.  
 
For more information, see the General FAQs on Payment Card and Third Party Transactions from the IRS.   

Have a question regarding Form 1099-K that wasn’t answered here? Reach out to our Merchant Support team here.

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How to Read a Monthly Credit Card Processing Statement

Jennifer Sumii |
How to Read a Monthly Credit Card Processing Statement photo

In the payments industry, it’s common practice to analyze credit card processing statements to help merchants understand what they’re paying — and where they could possibly save.

But, reading monthly credit card processing statements isn’t as clear-cut as one would hope. Fortunately though, once you have some basics down, the review process becomes much less daunting.

Here are a few pointers to help you quickly review a monthly credit card processing statement:


Step #1: Identify the Pricing Method

The first step is to determine how the account has been set up. What pricing model is being used?

The most common pricing methods are: Tiered, Interchange Plus (also referred to as Pass Through or Cost Plus), and Flat Rate.

  • Tiered Pricing, sometimes referred to as bundled or bucket pricing, describes a pricing model where the processor essentially divides the 400+ permutations of risk factors, into three groups, sometimes called buckets. Most commonly, tiered pricing is offered in a three-tier system: Qualified, Mid- or Partially-Qualified, and Non-Qualified. For more on tiered pricing, see the article: Understanding Credit Card Processing Charges.
  • Interchange Plus Pricing, also known as Pass Through or Cost Plus, is a method where the processor will apply the interchange cost (or what you can think of as wholesale pricing), and add a fixed mark-up fee to facilitate the transaction. Although this is the most transparent pricing program, it can be a bit confusing since there are hundreds of interchange categories and rates that could be applied in each billing cycle.
  • Flat Rate Pricing is where a single rate and/or per transaction fee is applied to all transactional activity. Most frequently, the transactional activity is separated into two categories: Card Present (Swiped/Dipped) and Card Not Present (Key Entered). A Flat Rate and/or per transaction fee is established for each Card Present and Card Not Present activity. This fee structure is typically most attractive to merchants with very low volume and transactional activity each month, as it’s the easiest to understand.

Another tip for identifying the pricing method: know the merchant business type. Certain pricing methods pair up with specific types of businesses or size of businesses.

For example, small business merchants are likely set-up on a Tiered Pricing method, whereas a large volume merchant is more commonly placed on Interchange Plus. Micro merchants — merchants with very low volume — are more attracted to a Flat Rate model.


Step #2: Determine Current Rates   

The Discount Rate is the rate charged to a merchant by the bank or processor for providing debit and credit card processing services. The rate is applied as a percentage and/or per item fee, and is calculated for settled transactions/volume. The rate will vary widely based on the pricing method.


Step #3: Review Authorization Fees

Authorization Fees are charged whenever the point-of-sale device or software system communicates with the processing network. This is most commonly used when the system is attempting to authorize a sale transaction on the cardholder’s account.

Authorization Fees are often mistaken for the per item fee, which is the fee assessed in the discount charges for settled transactions. The Authorization Fee can also widely vary, based on the card type (VISA, MasterCard, Discover, American Express), and if the authorization attempt is being conducted electronically or by phone/voice.


Step #4: Review Other Fees

Other Fees come in many forms. Most frequently are the monthly fees and annual fees.

Examples of Other Fees are: Monthly Service Fee, PCI Fee, Statement Fee, Equipment Rental or Lease Fee, Maintenance Fee, Reporting or Online Access Fee, Annual Fee, Regulatory Fee.


Step #5: Assess the Effective Rate

The Effective Rate is the overall percentage rate the merchant is charged, taking all fees (discount, authorization, other fees, etc.) into consideration. To calculate the Effective Rate, take the total fees paid and divide by the total volume.

A couple other factors to consider when calculating the Effective Rate:

  • Are all card types funded by the processor? For example, American Express may be funded separately, by American Express. If this is the case, you’ll want to exclude American Express volume from the Effective Rate calculation.
  • Are there any one-time or miscellaneous fees on the statement? If there are any one-time or miscellaneous fees, you may want to exclude these from the fee amount you use to calculate the Effective Rate. Doing this will help you to understand what is a typical Effective Rate.


Getting the Most Cost-Effective Rates and Fees

Yes, reviewing a credit card processing statement can seem intimidating, but it’s worth familiarizing yourself with the basics so that you understand the numbers and can make informed decisions about your business’ finances.

As a merchant services provider, Constellation Payments works with thousands of small to medium-sized businesses to make sure they are receiving the most cost-effective rates and fees.

If you’re unsure you’re receiving the best rates possible — or have specific questions about your credit card processing statement — contact us. We’ll gladly review your most recent statement with you so that you fully understand what you’re currently paying and where you could save.

Jennifer Sumii is Manager of Partner Relations for Constellation Payments. Within her role, she oversees critical company partnerships, including partners with custom integrations, large core processing accounts, and processor or origination companies. Her background includes extensive processing and banking experience, specifically FI/ISO/ICA relationship management, corporate and commercial banking relationship management, national account management, and new ISO/MSP implementation and training. You can reach Jennifer at jsumii@csipay.com.

Image courtesy of Pixabay.com.

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Convenience Fees & Surcharges: What’s the Difference? What’s Permitted? What’s Not?

Constellation Payments |

“What’s a convenience fee?” … “Who can charge one?” … “How does it differ from a surcharge? … “What if I’m a government agency, a school, college or university? What’s allowed?” …

Understanding the two types of fees — what they are, what’s permitted, and who can charge them — is enough to make anyone’s head spin.

That said, this article is written to shed some light on the subject and hopefully provide clarity around what can be a very confusing topic. As always, if you have any questions, feel free to send us an email or call 888.248.7060.

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7 Ways to Proactively Prevent Credit Card Chargebacks

Constellation Payments |

If you accept credit cards at your place of business, you’ve likely dealt with chargebacks at one time or another.

For those that haven’t, chargebacks occur when a cardholder contacts their credit card-issuing bank and asks for a refund on a transaction for a purchase or service made on their card.

A chargeback can be a HUGE setback to say the very least. Not only is it a big pain in the rear to handle that equals wasted time and resources to resolve … you, the merchant, can potentially lose out on the money you’re owed AND face an additional chargeback fee from the processor.

That said, it makes good business sense to employ proactive practices in your business to prevent a customer from charging back a payment.  

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