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Table of Contents

Lead Story

The FTC nabs MPI: A cautionary tale for ISOs


Industry Update

Visa's changes muddy interchange waters

Cynergy finds synergy in Abanco gateway

Visa may publish list of registered ISOs


Bart Kohler

Deterring ATM ram raids

Tracy Kitten


Forging ahead with PCI PED

Bulent Ozayaz


Street SmartsSM:
The POS system buzz

Dee Karawadra
Impact PaySystem

PCI priority: No agent left behind

Michael Petitti

All-star processing – Part II: Retaining your MVPs

Marcelo Paladini
Cynergy Data

Card Association rules to work by – Part II

David H. Press
Integrity Bankcard Consultants Inc.

Steer clear of sales pitfalls

J. David Siembieda
CrossCheck Inc.

E-wallets: Worth the risk?

Theodore F. Monroe et al.
Attorneys at Law

Company Profile

Amacai Information Corp.

New Products

Holy grail in a Bluetooth card reader

MagneSafe P55 card reader
MagTek Inc.

Kiosk revs up fast food delivery

iOrder food service kiosk


Prepare for the worst, plan for the best



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

May 14, 2007  •  Issue 07:05:01

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Card Association rules to work by – Part II

By David H. Press

Last month I answered some often asked questions about what is permitted for merchants under card Association rules and regulations. This month I am addressing more questions you, as ISOs and merchant level salespeople (MLSs), have asked about those requirements.

Malfunctioning magnetism

Some of you want to know if merchants can refuse to accept cards that do not swipe through their POS terminals.

Visa U.S.A.'s rules and regulations do not address this issue. So it would not be a violation to refuse to take a card that cannot swipe successfully. However, Visa requires merchants to make a manual imprint if they do process such transactions.

Remember, key-entered transactions are fully acceptable. But they are associated with higher fraud and charge-back rates. In addition, when transactions are key-entered, certain security features are not available, including verification of expiration date and Visa's Card Verification Value 2 program, which employs cryptography to enhance security.

Visa provides the following instructions to merchants for instances in which cards do not read when swiped:

For more information about situations in which magnetic strips cannot be read, see page 21 of the Rules for Visa Merchants: Card Acceptance and Chargeback Management Guidelines. The document is available on Visa's Web site at

Dirty laundering

ISOs and MLSs have also asked whether merchants can process transactions for additional businesses they, their spouses or friends may own.

The answer is no. Merchants should deposit transactions only for the business bound by the applicable merchant agreement. Depositing transactions for any other business is called laundering, or factoring, and is not allowed. It is a form of fraud associated with high chargeback rates.

Factoring usually occurs when a merchant is approached by a third party to run transactions on its behalf. The merchant then pays the money to the third party and gets stuck for the chargebacks.

Retailers that factor usually lose the right to process credit cards and can be added to the Member Alert to Control High-Risk database. Called the MATCH list, it contains information on terminated merchants. You should set up a separate account for each business that will be accepting bankcard payments (and make more money, too).

Surreptitious splits

Merchants often think they can make multiple charges on a card to complete a sale. This is called a split sale and is very risky to merchants.

Visa advises merchants to prepare one sales receipt per transaction, using the full transaction amount. Retailers are not allowed to split the cost of a single transaction between two or more sales receipts, using a single cardholder account, to avoid authorization limits or declines.

Volatile violations

To help resolve rule violations that may not be covered under their chargeback rules, the card Associations have established the compliance process, which offers members another dispute resolution option.

For example, the Visa compliance process can be used when all of the following conditions are met:

Many compliance violations are listed for merchants as prohibited. Following are some of the most common compliance violations:

The last compliance right listed can be very valuable to merchants. Yet, it is underutilized. Almost every high-chargeback merchant whom banks and ISOs ask me to review has a large number of chargebacks post for transactions in which the merchant has issued returns.

David H. Press is Principal and President of Integrity Bankcard Consultants Inc. Call him at 630-637-4010, e-mail or visit

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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