Card processing problems

[davidjgoss87]

Hi,

I'm with PayPoint.net (aka SECPay) for online payments, and using 3DSecure and postcode verification.

If a customer tries to order online but they have registered with the wrong address so their postcode doesn't match, the order fails. Fine, yes? But, by this time the funds have been authorised and "reserved" in their account. Customers will detect this on their online banking statement as it shows a difference between their available and account balances. Rightly, they query this, and I explain that although the amount has been authorised, it won't be debited and will be released back into their account after a day or two. Of course, customers are not happy about this and you can see why.

From my deductions, the authorisation process seems to follow this sequence:

1. The 3DSecure authentication takes place
2. The amount is authorised and reserved
3. The address verification takes place

It would make more sense for steps 2 and 3 to be swapped round, so the system only seeks the funds once all the other verification has been successful.

Does anyone know if it's this way with all payment gateways, or is it just PayPoint.net, or indeed something to do with the banks themselves?

Thanks

 

[deniser]

I have posted this question before as I have the same problem. If you search for the key words it may bring this up and lots of discussion.

I am told that it is all banks but some sites have more sophisticated ways of capturing the sale so that it does not go through immediately. I was told by Secpay that even upgrading to Secguard does not sort out this issue.

I agree that changing the order would seem to make sense. Have you asked Secpay to consider this?

 

[PayPoint net]

Hi there -

The ordering of steps 2 and 3 is a moot point because actually they happen at the same time - that is to say, a verification of the address to which a card is registered (AVS) is only possible as part of the request to the card issuer to authorise funds. This is because the customer's card issuer provides the AVS response as part of an authorisation response.

So, in this way authorised funds are reserved AND feedback on the AVS is provided and you have the option to abandon the authorisation if the AVS response is not satisfactory. In this sense it would be the same for any payment gateway that offered you the opportunity to change your mind once authorisation was complete and AVS was known.

Thankfully we offer the option to authorise only a nominal amount (1 unit of currency) which allows you to obtain the AVS response without causing any significant impact to the customer balance, before deciding whether to levy a follow up payment for the full amount if appropriate - which we let you do without requesting customer card details again.

If you do choose to only authorise the nominal amount in order to minimize the effect of reserved funds on your customer card, do please be aware that you will not get 3D Secure liability shift on the full amount as the 3D Secure authentication will be valid only for the original amount. Effectively, you must decide whether full liability shift or AVS matching is more important to you.

Please be aware that later this year Visa will introduce a zero value authorisation function to check cards and receive AVS response without reserving any amounts. This is already available in the North America region and we look forward to it's introduction and will monitor support among acquiring banks before updating Merchants on when it will be made available through our services.

Hope that helps!

Rory

 

[deniser]

Hi there -

Thankfully we offer the option to authorise only a nominal amount (1 unit of currency) which allows you to obtain the AVS response without causing any significant impact to the customer balance, before deciding whether to levy a follow up payment for the full amount if appropriate - which we let you do without requesting customer card details again.

Thank you Rory! I have asked the question many times of Secpay but no-one has ever told me that. How does one implement the nominal amount authorisation procedure?

Is that what most internet retailers do?

 

[PayPoint net]

This is a popular option -

In the options parameter, you would send deferred=true.

You then release the funds once you are happy with the transaction; you can do this manually via the Merchant Extranet or via our API.

Hope that's helpful. If you have any more questions specific to your set-up, PM me over your contact details and I can have someone in Technical Support give you a call to talk you through it.

Best wishes
Rory

 

[PayVector]

Hi there -

Please be aware that later this year Visa will introduce a zero value authorisation function to check cards and receive AVS response without reserving any amounts. This is already available in the North America region and we look forward to it's introduction and will monitor support among acquiring banks before updating Merchants on when it will be made available through our services.

Hope that helps!

Rory

Rory,

Will be interesting to see how many zero value transactions get declined for being below card scheme floor limits. Some banks will auto decline a transaction if it is below the interchange fee threshold as they are basically absorbing the cost to the card schemes from a merchant who is not theirs.

As AVS/CV2 declines have traditionally been a merchant decision (not so much with CV2 nowadays the problem exists with what to do with an AVS/CV2 merchant decline.

The way Iridium handles it is to send a void (in good faith) immediatly to the card issuer. In good faith because not all issuing banks support real time voids.

AVS is my oppinion is a very poor system. Records are often out of date or missing and the void in good faith issue just makes headaches for everyone involved throughout the transaction chain.

Hope that helps.

 

[PayPoint net]

Hi there -

The service we mentioned is a new scheme product and clearly the schemes will waive floor limits otherwise it will not work. They are already doing this in the US region. They charge a fixed interchange fee for this service and whilst the acquiring banks need to adjust to support this cost, that is no different to any onward-billable relationship with a merchant on other non-deductible scheme costs like chargebacks.

In any case this zero value auth is a future development in the Visa EU market and we were primarily seeking to assist our valued client in the context of our own systems.

AVS is only weak because it is not mandated in enough countries and checks only numeric portions of an address so can be manipulated, but to suggest records are out of date or missing is a bit odd as these are the same records with which issuers maintain credit or banking relationships with their customers. AVS still has great value in the UK and we offer extensive fraud and identity checking to compliment this.

 

[robokoder]

Hi there -

The service we mentioned is a new scheme product and clearly the schemes will waive floor limits otherwise it will not work. They are already doing this in the US region. They charge a fixed interchange fee for this service and whilst the acquiring banks need to adjust to support this cost, that is no different to any onward-billable relationship with a merchant on other non-deductible scheme costs like chargebacks.

In any case this zero value auth is a future development in the Visa EU market and we were primarily seeking to assist our valued client in the context of our own systems.

AVS is only weak because it is not mandated in enough countries and checks only numeric portions of an address so can be manipulated, but to suggest records are out of date or missing is a bit odd as these are the same records with which issuers maintain credit or banking relationships with their customers. AVS still has great value in the UK and we offer extensive fraud and identity checking to compliment this.

Interesting info, thanks!

The current work arounds do seem really rough-and-ready, so this is great move by Visa.

 

[Mustaka]

but to suggest records are out of date or missing is a bit odd as these are the same records with which issuers maintain credit or banking relationships with their customers. AVS still has great value in the UK and we offer extensive fraud and identity checking to compliment this.

I will give you an example. My own debit card for my current account has an address from 3 years ago however my statements and all the bank sales stuff goes to my new address. I have tried a couple of times to get it changed but no one at my bank seems to know how to change it. I gave up a couple of years back.

[FONT=arial,helvetica,sans-serif]Zero ($0) Dollar Account Verification (AVS Only)
Also known as an “AVS-only” transaction, its purpose is similar to the One Dollar Authorization. The principal differences are that the value of the authorization is literally zero. Account Verifications provide merchants with an effective means of validating account numbers and other authentication elements such as CVV2 and AVS.

What is interesting is the following.

[/FONT][FONT=arial,helvetica,sans-serif]Effective July 1, 2009, Visa implemented an Account Verification Fee for each account verification ($0 authorization or AVS Only) request transaction and beginning October 1, 2009, Visa will implement a Misuse of the Authorization System Fee ($1 Authorization) which will be applied to any authorization transaction that is not followed by a matching clearing transaction (delay capture), or in the case of a cancelled or timed out transaction, any transaction not properly reversed (voided).

So basically a void will still need to go in with the new system on AVS declines. My read is that on an AVS-ONLY after doing the initial auth for 0.00 currency units you would then have to redo the authorisation for the full amount. This introduces further transaction costs to the processor and double the transaction time which is a system resource hit.

Anyways that is the USA implementation. Will be interesting to see what they come up with over here.
[/FONT]