Thursday, August 6, 2009

Transaction Authorization and Presentment Requirements

Authorizing Transactions

When required by the Credit Card Associations' standards or by its acquiring bank, the merchant must obtain an authorization before completing a transaction. Standards concerning authorizations are published annually by the Credit Card Associations.

Presenting Transactions

The following standards apply to the presentment of transactions.
  • Valid and invalid transactions. A merchant must present to its acquiring bank only valid transactions between itself and a bona fide cardholder. A merchant must not present transactions that it knows or should have known to be fraudulent or not authorized by the cardholder, or authorized by a cardholder that is in collusion with the merchant for a fraudulent intent. Within the scope of this rule, the merchant is responsible for the actions of its employees.
  • Present transactions within three business days. The merchant must present records of valid transactions to its acquiring bank no later than three bank business days after the date of the transaction, except:
    • The record must not be presented until after the goods are shipped or the services are performed unless, at the time of the transaction, the cardholder agrees to a properly disclosed delayed delivery of the goods or services.
    • When the merchant receives authorization for a delayed presentment (in which case the words "Delayed Presentment" must be noted on the TID).
    • When the merchant is obligated by law to retain the sales receipt or return it to a buyer upon timely cancellation, in which case the merchant should present the record within 10 business days after the transaction date.

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