(Part I of III) How To Present Merchant Services to Your POS Prospects

(Part I of III) How To Present Merchant Services to Your POS Prospects

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A question I come across a lot from our partners is “What is the best way for me to introduce merchant services to my clients?” It’s a great question and one that I enjoy answering.

There is no doubt the topic of merchant processing can be difficult to cover with merchants. Chances are, the business owner has been burned by a processor in the past or spends a good portion of their week dodging aggressive sales reps. The industry has gotten a bad wrap because of this.

As a co-founder of a restaurant point-of-sale company, I learned during my 10 years with the company that selling merchant services was more than saving people money. It involved building a relationship with merchants and earning their trust before they would consider switching. I was fortunate enough to have spent my time nurturing my point-of-sale clients. I had many great relationships, and my clients looked to me for advice on areas throughout their entire business. This made the topic of merchant processing much easier to present.

In this three part series, I will layout my experience in the POS and merchant processing industry and how I found success with relationship focus selling. Part One will include what questions to ask your POS Prospects (existing businesses that do not use your POS system) and when to ask them. In Part Two, I will discuss the best ways to approach your Current POS Clients (clients using your POS but another processor). Finally, Part Three will offer tips from BOLD. partner, Josh Carper with Gorilla Technologies. Josh will share his success and how he has signed ~99% of his point-of-sale merchants up for merchant processing.

PART ONE

POS PROSPECTS

It would be hard to find any merchant who enjoys talking about merchant services. The industry has been inundated with inexperienced sales people who deliver an amazing quote but fall short on service or delivering the pricing that was promised. However, ISVs and VARs are at a huge advantage when it comes to offering credit card processing to merchants. Aside from the expertise an ISV or VAR might have in the merchant’s industry, there are reasons merchants benefit by receiving the POS and merchant processing from a single source:

1. Perhaps the largest benefit of a merchant switching their processing over to the POS vendor is the consolidation of support. We all want our merchants to be happy. A happy merchant means repeat business and referrals. I have found the biggest gripe many merchants have with their POS or merchant processor is when an issue arises and both parties pass the blame off to one another. Every merchant has been there, and it is a huge headache for them. They just want their system to work and they want to know the right party is handling the situation. Imagine how refreshing it is for them to hear that their support for point-of-sale AND credit cards are directed to ONE phone number. In a partnership with BOLD, we have designed our support to never pass the blame. No matter if we field the call from the merchant or our partner, our staff is equipped with POS experience to understand the situation and work WITH the ISV or VAR until the situation is resolved.

2. EMV integration has thrown a wrench into the support process for many companies when it comes to the responsibilities of the POS provider and merchant processor. While many merchant processors attempt to download and deliver a semi-integrated unit for the ISV or VAR to use, they are more than likely unwilling to assist after installation. This can leave the merchant and POS provider in a tough predicament when issues arise. In the end, it is best for the merchant to receive their equipment from a processor that has a relationship with their POS provider. 

Approach for Businesses in the Buildout Process

The obvious observation about new merchants in the buildout process is that the majority are going to install a POS system and almost all of them will need merchant services. Chances are, they have been hounded already by merchant processors, so selling on processing alone can be tough. I have always found new business owners are more willing to talk to me as a point-of-sale dealer rather than a merchant processor because the ROI and functionality of a POS system is much more interesting to talk about.

A good approach is to wait on mentioning merchant services until they have decided to come on board as a POS client. As you near closing, I recommend casually asking if they are still considering bids for merchant services. Remember, even if they have signed with ten other processors, their credit card agreement is not active until they run their first transaction, so it is not too late if they haven’t opened. This makes it much easier for both parties. You have proven to have earned their trust by selling them a POS, so they are going to look for input on other areas of their business.

Approach for Businesses That Are Currently Open

It is important to note that people do not like change. If a merchant is currently in business and using merchant processing, timing plays a huge role on if they will be willing to talk to another merchant processor or not. Depending on their situation, I would almost always lead with their POS system and ask if they are satisfied. I found they were more open to change when it came to the tangible technology they use on a daily basis. Chances are, they have recently felt the pain of bad support experience or the system is on its last leg, so they are more willing to entertain a discussion about POS rather than merchant services.

Be sure to look out for Part Two of this series, “Best Approaches for Offering Merchant Services to Your POS Clients” due out next week. If you have any questions on how you can you can offer merchant services to your prospects and clients, feel free to reach out to me at gliu@boldpay.io or (770) 318-3456.

Need a game plan on how to reach out to your prospects and clients? Contact me below so we can discuss strategy.

Top 10 Objections When it Comes to Merchant Processing

Top 10 Objections When it Comes to Merchant Processing

Let’s face it, many business owners see merchant processing as a commodity. And who can blame them? The industry pumps out salespeople who sell on rates alone and have limited knowledge of the industry, its regulations, and the systems that authorize their transactions.

Merchants tend to shy away from any discussion that involves credit card processing. Chances are, they have experienced an unfortunate event that left them telling themselves they will never switch again.

Objections to merchant processing has evolved over the years. Some are valid, and some are merely used as a polite way of expressing they are not interested. With that said, I think this a good time to share my “Top 10 Objection and Rebuttal” list with BOLD Partners. Hopefully this document will help you when you come across merchants who politely tells you they are “not interested.”

NICHOLE’S TOP 10 OBJECTIONS AND REBUTTALS

1. I’m Happy With My Current Provider
This is a common objection which usually means “I am not interested in talking right now,” even if they aren’t happy with their current provider. It helps to remind the business owner that is it important to review their statements every few months to expose any hidden fees that drive their cost up. You are not asking them to change. You merely want an opportunity to analyze their statements to confirm what they are paying is what they were originally quoted.

2. I Have A Contract That I Can’t Cancel
Trust me. They are not the first merchant that we have come across that is tied to a contract. What we have found is that many times there are more savings in breaking their current agreement for a lower merchant processing rate than waiting out the term. The right approach would be to request a thorough cost-benefit analysis and compare the monthly savings vs. the cost of breaking the agreement.

3. Last Time I Tried To Change I Had A Bad Experience – Never Again
The first step you will want to take is to find out if it was a financial issue or a setup issue.

If they ran into a financial issue, reassure them that we have rates explicitly designed for their industry and transaction needs. It would help to have a few sample statements ready to show so they can see the clarity of the reporting.

If it was a setup issue, they must be aware that many people in the industry can sell processing but are unfamiliar with the technology involved. BOLD specializes in point of sale and terminal setups. We work closely with each software company to make sure the system is set up and tested right the first time.

4. My Processor Gives Me The Terminal For Free – Do You?
A merchant’s agreement may state “free terminal,” but we all know nothing is free. Whether it’s a “annual/monthly statement fee” (which BOLD does not charge) or “technology fees” (which BOLD does not charge), many processors have mastered the art of hiding the cost of terminals in their billing.

5. I Already Have The Best Rate
This is probably the biggest objection we hear. However, it would surprise you to know how many merchants switched to BOLD when a thorough statement analysis is complete. At no fault to the merchant, “I already have the best rate” usually means “I already have the best quote.” We need to help them understand that what was originally quoted is more than likely not what they are paying. The majority of statement analysis we perform reveal hidden fees that were never discussed during the quoting process. As a result, they incur a much higher effective rate than what they expect.

6. What Are Your Rates
While this response may sound “salesy,” there is no possible way to answer this question without understanding the merchant’s business and transaction types. You want to give the business owner the information they are looking for, but more importantly, you want to give them the correct information. Providing misinformed information benefits no one.  Having a better understanding of the merchant’s monthly volume, transaction type (swiped, manually keyed, moto, etc.) and transaction amount/count is vital information to give an accurate quote. .

7. I Won’t Show My Statement
Many merchants are hesitant to share financials with strangers. It makes sense. Assure the merchant that the information on the statement is only being used to analyze their fees and will be strictly confidential. If it makes it easier, offer to review the financials with them present and that way you are not leaving with a physical copy. A few minutes can reveal a lot about their rates and can be very informative for the business owner.

8. No Thanks … I Just Changed Processors
If the merchant changed processors recently, now would be a better time than ever to complete a statement analysis! This will ensure they are receiving the Effective Rate they were quoted. Let it be known you are not asking them to switch. You would simply like to walk through their statement to explain the charges to make sure they fall in line with what was sold to them.

9. Every Processor Charges The Same, And There Is No Such Thing As True Savings
This is a common misconception in the merchant processing industry. The merchant needs to know that there are processors that run sales shops that are limited on the savings they can offer. However, there are Independent Sales Organizations (ISO) like BOLD who have greater control on the pricing they offer. Every rate and fee will be detailed in their agreement, and their statements are designed to outline their savings in a CLEAR and CONCISE layout.

10. This Is My Busiest Time Of The Year / Not A Good Time To Change
There is never a good time in business for a change but consider this. If there is a substantial monthly saving by switching and the changeover is seamless, isn’t the busy season a great time for a change to maximize their savings? The best approach that I have found for this situation is to assure the merchant you are not asking them to change right now. You are merely trying to analyze their savings. If they feel a switch-over is worth it, great! If not, then they have the information they need to perform the switch-over at a more convenient time.

I hope these suggestions help steer BOLD partners to educate business owners about merchant services. We all know people buy from people they trust. For me, a large part of my success in merchant services is built around me consulting merchants so they can make an informed decision.

Your BOLD Partner,
Nichole Kazenske
V.P. of Partner Relationships
nkazenske@boldpay.io

BONUS CONTENT

You didn’t think I have only ran across ten objections in my life time, did you? Below are additional questions/objections that did not make the top ten but are still worth mentioning.

Competitor

My Bank Does My Processing – My Accounts / Loan /Credit Cards Are With Them
Many banks are known for offering “perks” if business owners sign up for their processing. The truth is, the bank’s number one focus is having the business’s money rest in their banks. Changing processors has less impact than banks let on when it comes to interest rates and credit limits. Many times the merchants are paying MORE for the inflated processing than they would with a slightly higher interest rate.

My Processor And I Have Been Friends For Years – I’m Loyal To My Friends
Let’s all agree that loyalty is excellent, and it is prevalent for merchants to do business with friends at some point. However, while their friend may offer a “great” deal in processing, the agreement is based on the margin they can give. It is not uncommon for processors like BOLD. with lower buy rates than the competition to be able to save the merchant money.

I Use Quick Books To Do My Processing
Quickbooks is a handy tool when it comes to merchants running their business, and many who rely on the software also rely on integrated merchant processing. BOLD has solutions in place that enable the merchant to integrate with QuickBooks while saving money on processing.

I Use Paypal And Process On The Internet
The PayPal suite has gained traction in many brick and mortar stores. However, many merchants believe they are paying the best rates possible when they implement their solution, this is not the case. BOLD has won the business of many merchants who once used PayPal when a cost-benefit analysis was performed on their statements. Also the ROI of a POS system that is built for their industry.

Service

I Prefer To Deal With Someone Local
Who doesn’t like dealing with someone local? But what happens if that “someone local” decides to sell cars next month? Where does their support go? BOLD and their partners are available at all hours of the day ready to help. We are not a fly-by-night processor just passing through town. There is always someone available to help.

Hardware/POS

Do I Have To Buy / Lease A New Terminal If I Use Your Company
There are many value-added services offered by BOLD (i.e., MX Invoicing and MX Merchant) that allows the merchant to run credit cards with no additional cost or hardware.

Can I Use My Own Machine If I Sign Up With You
Machines can be reprogrammed. However, regulations change and many terminals can be deemed obsolete if they are not up to standard (i.e., EMV regulations). There are specific security issues mandated by the federal government that must be implemented when you get hooked up to our network. Many of the older model terminals do not have sufficient memory or features that allow this. Also, there are many new types of terminals being introduced today that provide you with features that make your life a lot easier, and it may be worth taking a look at what we can offer.

I Get All My Terminal Supplies For Free … Do You Offer Free Supplies
It is important to remember that no supplies are free (See Number 4 Above). Usually, this means that the merchant is being charged in some other way so that they are still getting paid for the supplies. It would be best to look at their statements to review the miscellaneous/hidden fees to determine where expenses can be cut. 

My Processor Tells Me They Are The Only Ones Who Can Program My Machine
While this is true in some cases, it is essential to learn who their processor is. Like many of the options above, many times the savings in merchant service fees quickly make up for the cost of a $150 terminal.

I Have A POS System Installed To Do My Processing
S
tep one is to find out if they are happy with the POS system and the service. If they say “Yes,” inform the merchant that BOLD is built to be compatible with over 95% of POS systems and our team is designed to specialize in the POS industry. The second step is to offer compatibility consultation to review the software and the gateway/hardware used. If the merchant informs you, they are not happy with their POS system; this is a great time to determine the issues they are having and offer them a chance to review POS options that better fit their business.

Rate/Fee

Are There Any Monthly Fees I Would Have To Pay
Short answer…yes. But choosing an ISO that works with BOLD who can write direct deals with Visa/Mastercard, which means less “middle-men” and fewer fees.

All I Pay Now Is A Rate Of _____ % And A ____ Cent Swipe Fee … No Other Charges
This sounds like an amazing deal, and there is a chance this is true. More than likely, this also means they are quoting a cost-plus rate, which means a percentage/transaction fee on top of interchange rates. At this point, it becomes a game of who can offer the lowest cost-plus rate with service to back it up.

 I Belong To A Processing Association – They Offer The Best Rates
While this could be true, the merchant needs to understand a reasonable rate does not mean they are receiving the best true effective rate. A true effective rate is a more accurate representation of fees when calculating rates. It involves dividing the total fees by total volume to determine the true rate charged against all tiers. Many times merchants are surprised to learn how much more they are paying when compared to what they were quoted.

General

I’m Too Busy To Deal With This Right Now
At this point, it might be best to practice patience with persistence. Offer to schedule a call or meeting at a better date and time. If it is an opportunity worth pursuing, find ways to keep them on your radar. Today might not be a good day for them. Chances are there will be a day they look for a change, and your name will be on the top of their list.

Would I Have To Sign A Contract /I’m not too fond of Contracts
Not many people like contracts. In this case, the merchant should be aware that the merchant processing agreement is designed to protect both parties. Plus, you are not asking them to sign a document to analyze their statement. You are merely researching their fees to inform them of any possible savings. Many times the savings is substantial enough that the agreement is a non-issue.

Ready to Learn More?

The Digital Marketing Cycle- From Lead to Customer

The Digital Marketing Cycle- From Lead to Customer

Digital marketing has evolved and will continue to change for the unforeseeable future. In its infant stages, a business could see a good bit of traction from Search Engine Optimization (SEO) alone. Fast forward to recent times, many companies have had to find creative ways to drive “clicks” to their site in order to win the “Google Game”.

Many businesses have found great success by providing informative content meant to drive clicks to their site. Their hope is to attract readers looking for information about their industry and not necessarily their company. What many companies miss when doing this is the benefits of integrating all of their digital services so the lead can stay informed from conception to close.

THE LEAD

When a company receives a lead, this is when the integration between Customer Relation Management (CRM) software and Email Engine (Mailchimp, Constant Contact, etc) should start. The status of that lead/contact should always be in sync between the CRM and Email Engine throughout the sales cycle. This allows the reader to receive information relevant to them.

Drip marketing campaigns should start as soon as the lead willing to receive information is entered into your CRM. A drip marketing campaign is a series of emails that are scheduled and can be sent based on actions of the reader (opens, clicks, etc). For leads, emails should be useful information about your/their industry with a sprinkle of information about your company. You can quickly see your unsubscribes go up if the lead continuously feels “sold” to.

There are a few benefits to these emails. The benefit we are covering in this piece are “clicks”. Clicks to your site from external sources (social media, email campaigns, etc) are huge when it comes to Google looking for relevant websites. As users visit your blog, Google identifies the traffic. An active page containing a subject will be ranked higher as prospects search for that subject stored on your blog/site. Combined with pay-per-click (social media post boost and Google Ads), your blog can find a good amount of traffic.

THE OPPORTUNITY

Once the lead expresses interest and a demo/quote has been presented, a conversion in your CRM should update the status in your Email Engine. This starts an entirely new drip marketing campaign. These emails are slightly more forward about your company and should include a call-to-action. It is also helpful to make these emails more personable. For example, it is a good idea to write a few emails directly to the prospect from your personal address on topics they might be interested in (i.e.- “Hey [first name], We just had a new blog post hit today that I thought you might find useful.”)

THE CLOSE

Congratulations! Looks like your hard work paid off. Now it is time to include your new customer in more useful information. A customer no longer needs to be “sold” on your service. A customer is now looking to be nurtured with information on the product/service they purchased. This is when an online knowledge base can be useful for your company. Emails can direct your customers to your site (again, still driving “clicks”) with training or commonly asked questions about your products and service.

The digital marketing process can be a long one. In fact, it is common for it to take 4-6 months before you feel any impact from it. The important thing is to stick with it. When done correctly, the benefits can snowball…quickly.

Tips on Informing Your Merchants About Additional Services Your Company Offers

Tips on Informing Your Merchants About Additional Services Your Company Offers

Topics

  • The Power of an online Blog

  • Benefits of a client facing knowledge base

  • Using drip marketing to stay consistent

  • Use Priority I.S. as a resource

You have an amazing company, and you’ve worked hard to include value added services that can help your merchants grow. The final, and probably the most difficult, step is informing your customers and capitalizing on their interest.

Outside of using your company’s time and resources to physically call on each of your merchants, there are cost-effective tools available that can help your communication. Below are some ideas on getting started and the steps you can take to maintain a strong online presence with your customers while attracting new prospects.

TOOLS TO CONSIDER

Below are some great tools to make your site more interactive for your clients. Another HUGE benefit is the traction your site can receive ultimately driving up your search engine ranking.

Online Blog

Tap into your knowledge. No one knows your business like you, so share it. Willingness to share this information builds credibility with your prospects and clients as well as drive traffic to your website. It is important to remember that the typical reader of your blog may not be a potential client. What you do earn are clicks, and that can go a long way on search engines.

Another great tip is to use your resources. Ask your employees for topics or even write-ups. This can make a huge impact by building credibility throughout your team and displaying the versatility of your office.

Online Knowledge Base

A knowledge base can not only be informative to your current clients, it can also drive new traffic to your site. When prospects search for solutions that fit the topic of your post, search engines look for indexed pages that fit that search based on activity and age of the page. When one works in conjunction with a blog and email engine, the click rate and page ranking can increase drastically. Below are some benefits one would consider when deciding to implement an online knowledge base:

  • Decrease your support load by directing your clients to an online resource.

  • Use the knowledge base to inform your clients about new features and offerings.

  • Clicks to your knowledge can mean more traction for your site elevating your in the “Google Game”. Now, when prospects search for a topic in your knowledge base, you are closer to the top of the list.

Email/Drip Marketing

Drip marketing can be a great way to stay in front of current and future clients. Emails can be automated and sent based on the users interaction with your emails. When your systems are working together, it can be a great resource to deliver the information hosted on your blog and knowledge base. Depending on the Customer Relationship Management (CRM) and email client you use, drip marketing can me set on autopilot by simply checking a box in your CRM.

KEYS TO REMEMBER

  • Stay consistent. A typical marketing strategy can take 90-120 days to drive results when done correctly. Once it takes off, you will witness a snowball effect.

  • If needed, use outside resources to help you with your content strategy and creation

  • Priority I.S. has a marketing department available for our partners to help them get started. Email us at marketing@priorityis.com to get over your goals and develop a game plan.

Understanding and Preventing Merchant Processing Holds and Reserves

Understanding and Preventing Merchant Processing Holds and Reserves

There are a number of reasons a merchant can experience a credit card hold/reserve. There are also a number of things merchants can do to prevent this headache.

Knowing the basics of credit card reserves and holds can save merchants quite a bit of frustration and hopefully help them avoid experiencing a delay when receiving their funds.

WHAT IS THE DIFFERENCE BETWEEN AN ACCOUNT RESERVE AND FUNDS WITHHELD (HOLD)?

Account Reserve is money set aside as a security deposit. It is usually due to the nature of the business (i.e.- a business at a high risk for chargebacks). When a processor determines a reserve is needed, it is common for the processor to hold a percentage of the merchant’s batches until a predetermined amount is reached.

Funds Withheld (Holds) take place when red flags are triggered by an unusual transaction type and the merchant processor holds the funds until further research is done or the chargeback deadline has passed.

WHY DO ACCOUNT RESERVES AND HOLDS EXIST?

Acquiring Banks (the merchant processor) are basically a line of credit until the chargeback time limit expires (at which point the card holder can not refute the transaction. Learn More About Chargebacks Here). If the cardholder disputes the charge, the merchant processor can use the reserve/hold to repay the consumer rather than try to recoup the amount from the merchant directly.

WHO DECIDES WHAT FOR A MERCHANT ACCOUNT RESERVE

Ultimately, it is the merchant processor that takes on the risk for merchant processing by funding merchants for transactions that can be disputed at a later date. It is up to the merchant processor to decide the parameters for the account reserve and sometimes looks at it as a case-by-case scenario (i.e.- length of time the merchant has been processing, the goods sold, chargeback history, etc).

Reserves

It is typical for high-risk merchants to need a reserve, and the processor can require a reserve as soon as the merchant begins processing.

Holds

The merchant processor can put a hold on an account based on an individual transaction that may look out of the ordinary (uncommonly high tip, larger than usual transaction, etc). When a merchant first signs up for merchant processing the merchant processor requests the expected average monthly volume, average ticket size, and highest projected ticket amount. The processor can use these queues to setup red flags in their system to identify unusual credit card activity. For example, if a restaurant claims their highest ticket is $1,000 but runs a $2,500 transaction for a catering order, the merchant processor will review that transaction and determine if a hold is needed until the chargeback deadline is cleared.

HOW MERCHANTS CAN PREVENT RESERVES AND HOLDS

Set the right expectations up front

When deciding the average ticket/monthly volume and the high ticket amount, it is important to be as accurate as possible to reduce any unnecessary red flags while processing. Merchants will also want to confirm their SIC Code (a four-digit codes that categorize companies by the type of business activities they engage in) is correct at the time of their application boarding. The wrong SIC code may categorize them as a high risk merchant resulting in unnecessary reserves.

Be upfront with the processor about the nature of the business

It helps to provide as much information as possible during the boarding process. Previous statements, chargeback history, business history, etc all can benefit the merchant by building credibility with the processor. Don’t lose hope if the processor requests a reserve on the account. Depending on the processor, the merchant can sometimes provide additional information at the time of approval to either avoid the reserve or lessen the amount requested.

Notify the processor about unusual transactions before they are batched

The best way to avoid holds on individual transactions is to notify the processor before the transaction is authorized and batched. It is typical for the processor to request either a signed invoice or a back story of the transaction. The risk department will take note of the transaction and usually fund the merchant for the full amount with the correct documentation.

While not ideal, reserves and holds are a necessary “evil” when it comes to keeping the merchant and processor safe from losing money. It is important for merchants to talk to their processor to find out what they require and to confirm the parameters they have on file are accurate based on the volume that is ran.

Card Brand Rules Every Merchant Should Know

Card Brand Rules Every Merchant Should Know

As POS and credit card technology changes, so do the requirements from Visa, MasterCard, Discover, and American Express. Merchants rely on their merchant processor more than ever for information on how to remain compliant with bankcard regulations. Doing so can help the merchant avoid chargebacks and fees passed down from the four major card brands.

MINIMUM PURCHASE AMOUNTS

Merchants are allowed to require a minimum amount in order to run a credit card, however there are a couple rules they should know:

  1. The required minimum amount for any credit card transaction cannot be more then $10

  2. Merchants cannot require a min amount on debit transactions.

  3. Requiring a min on debit can result into being reported to card brands.

    1. First offense – formal request that the practice is stopped

    2. Second offense- Results in a fine

    3. A third offense could result in the merchant being blacklisted from running future transactions.

REQUESTING CUSTOMER IDS

 Merchants can require a customer to see ID with a few guidelines they must follow:

  1. If the customer’s ID does not match the name on the card, the merchant can refuse to accept the card.

  2. If the customer does not have or is unwilling to present an ID, the merchant should honor the card if there is proof of card presence, a valid authorization, and a valid pin and signature.

MERCHANT MCC CODES

In order to avoid confusion and issues running credit card transactions, merchants should make sure they are classified under the correct MCC Code when signing up with their merchant processor.

  1. An MCC Code is a four digit code that categorizes the merchant’s business and dictates their interchange rate and the card types they are allowed to run.

  2. These codes are also used for activity tracking, reporting, and risk management

  3. Merchant should verify that they are classified correctly. If they fall under two different MCC Codes, they should use the MCC Code that has the highest volume or activate two merchant accounts.

PARTIAL AUTHORIZATIONS

Partial Authorization Defined (TSYS): A partial authorization occurs when a payment card authorization is attempted for a transaction and there are not enough funds available in the account to cover the full amount. The issuer returns an authorization for the amount available in the account, leaving the merchant to obtain an additional form of payment from the customer for the balance.

The simple answer for all pre-authorizations is that all credit card machines and point-of-sale systems are required to take partial authorizations in order to be compliant. Card brand rules include:

  1. Discover requires that you take partial authorizations for all merchant category types

  2. Visa and MasterCard requires pre-authorizations for only certain  MCC Codes 5812 (eating places and restaurants) and 5814 (fast food restaurants)

  3. Card brands do not allow there to be machines that can disable partial authorizations.

  4. If the sale is greater than the partial authorization (for example: if the partial auth is $5 and the merchant adds a tip resulting in a transaction amount greater than the available funds), the transaction can be disputed by the cardholder for incorrect charge since the partial authorization is only $5.

Additional References:
Visa Rules and Regulations
MasterCard Rules and Regulations

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