If merchants and the merchant service providers servicing them are not hearing an ominous tick, tick, tick, maybe they should. On Sept. 30, 2007, Visa U.S.A. intends to begin fining merchant service providers $5,000 per month for each of their level 1 and level 2 merchants who have not complied with the Payment Card Industry (PCI) Data Security Standard.

That's not all. Noncompliant merchants may be assessed fines starting at $25,000 per month. And said merchants also face the prospect of being downgraded one level, meaning they will have to pay more for credit card transaction processing.

Acquiring banks are responsible for making sure their merchants are PCI compliant. And the PCI standard is meant to safeguard credit card cardholders' information.

A level 2 merchant is any business that transaction processes 1 to 6 million Visa transactions per year. A level 1 merchant is defined as any merchant credit card processing over 6 million Visa transactions per year. But the level 1 category also applies to credit card processing merchants who have suffered hacks on their computer systems that resulted in the theft of customers' account data.

Furthermore, Visa and MasterCard Worldwide can categorize any merchant as level 1 if the card Associations deem the credit card processing merchants pose a risk to the system.

According to the PCI Compliance Guide (found at www.pcicomplianceguide.org), Visa predicts 65% of all credit card processing merchants will have complied with the PCI by the end of 2007; the threat of levying fines is designed to speed the process.

The PCI includes 12 major requirements credit card processing merchants must strictly adhere to. Any violation may result in a business losing its compliance status. Each incidence of noncompliance will result in fines, suspension and revocation of a credit card processing privileges.

For PCI compliance, all merchants are required to fill out a Self Assessment Questionnaire (SAQ) annually. The SAQ is approximately 75 questions designed to assess a merchant's actual working conditions.

Merchants are also required to undergo a quarterly scan of their systems for storing, transmitting and processing cardholder data. Scans must be done by approved PCI scanning vendors.

Labels: credit card processing, merchant services provider, payment card industry data security standard

After being notified by a cardholder about a disputed credit card processing transaction, the cardholder's issuing bank may order a copy of that particular sales draft through the merchant service provider to determine what occurred at the point of sale. This is called a copy request or retrieval. A retrieval request most often occurs when a Cardholder loses their copy of the credit card processing transaction receipt, does not remember the transaction or questions the transaction for any reason.



A retrieval can be requested by the cardholder's bank for up to 18 months from the sale date, therefore it is crucial that you keep your receipts for this time frame. When a copy of the credit card processing transaction receipt is requested, you will receive a Retrieval Request notice from your merchant service provider. When a retrieval is requested, you must supply a legible copy of the sales draft to your merchant service provider along with any supporting documentation such as a credit draft, if one was issued. During the retrieval process, the disputed amount remains in your deposit account.



It is very important that you always respond in a timely manner when a retrieval request takes place. If the retrieval request is not acted upon quickly, or you provide an illegible sales draft, it may evolve into a chargeback, at which time the your account will be debited by your merchant service provider for the amount of the disputed credit card processing transaction. Unfortunately, if you do not respond to a retrieval request you will not have any representment rights once a chargeback is issued and additional fees may be assessed by your merchant service provider.

What is a chargeback?
A chargeback is a credit card processing transaction disputed by the cardholder or card issuer. There are many reasons for chargebacks, but the most common are returned merchandise, terminated services, disputes, errors, or fraud. Merchants must be able to provide proof that the disputed credit card transaction is valid and in accordance with Visa/MasterCard regulations or risk having their account debited for the disputed credit card processing amount..

What does a chargeback mean to me?
For your credit card processing business, a chargeback translates into extra processing time and cost, a narrower profit margin for the sale, and possibly a loss of revenue. It is important to carefully track and manage the credit card processing chargebacks that you receive, take steps to avoid future chargebacks, and know your representment rights. In addition, you should also take measures to recover losses from customers who are financially liable for transactions that were charged back to your business.

How do I avoid chargebacks?
To avoid chargebacks, act promptly if contacted directly by the cardholder to resolve a dispute. By working directly with the cardholder, you can avoid costly fees and credit card processing costs as well as promote goodwill with your customer. If the cardholder does not contact you, respond to inquiries from your merchant service provider with as much information as possible about the sales transaction in question.

Labels: chargebacks, credit card processing, merchant services provider