Interchange "Card Not Present"

[SolutionsGal]

CPS I Card Not Present Credit 1.80% plus $0.10
CPS I Card Not Present Debit 1.60% plus $0.15

Consumer Traditional Cards. Card Not Present! Signature Not Obtained! Mail or Phone Order, Address Verification required. Customer Service phone number and invoice number required. Must be authorized. Authorization amount must equal transaction amount. Maximum 2 days to deposit & settle.

This category impacts most Pizza shops because of the delivery side of the business. Visa/Mastercard assigns a greater risk for fraud on card not present categories, although for the life of me I can’t understand why anyone would use a fraudulent card to get a pizza. Best practices are to always get the signature and make a copy of the card if possible and look at a photo ID if you can.

 

[brad_randall]

SolutionsGal:

although for the life of me I can’t understand why anyone would use a fraudulent card to get a pizza

Because: Who is going to prosecute them? Visa/Mastercard? The processing company? In the end, it’s not worth their time.

It all gets charged back to me with a penalty for their trouble and what the heck am I supposed to do with it? About all I have time to do is not get burned a 2nd time. IF there were a collection company for CC chargebacks like for bad checks, I’d sign up in a heartbeat… but I’m not holding my breath for that to happen anytime soon.

Edit: Yes. Venting not directed at you personally, Diana. This a frustration with the credit-card industry in general. Please don’t let me ruin your day.

 

[Registered_Guest]

Diana,

What incentive does the industry have to prevent fraud?

As brad stated about, the only one out any money in a chargeback is the merchant. I’m pretty certain that the chargeback fee the processor charges more than covers the cost of processing the chargeback, and I’d bet it is actually a profit area for them.

(BTW, I hope you don’t take these as personal attacks - I’m glad you are willing to have these discussions)

 

[SolutionsGal]

Registered Guest:

Diana,

What incentive does the industry have to prevent fraud?

As brad stated about, the only one out any money in a chargeback is the merchant. I’m pretty certain that the chargeback fee the processor charges more than covers the cost of processing the chargeback, and I’d bet it is actually a profit area for them.

(BTW, I hope you don’t take these as personal attacks - I’m glad you are willing to have these discussions)

Thanks for the opportunity to have these discussions as well.

http://usa.visa.com/merchants/risk_mana … esent.html

Visa/Mastercard understand that fraud is a concern for all parties involved and most likely it will never go away, they are constantly trying to stay ahead of the fraudsters, but they are very smart. My solution for the problem is to have fingerprint scanning integrated into a payment solution. I can’t imagine someone would be brave enough to use a fraudulent card and give their fingerprint while doing it. This kind of technology would require huge investments for not only Visa/Mastercard/processors, but also for the merchant. It is the same reason, Smart Cards have not been introduced into the U.S. Market, the costs have been unpalatable for providers and merchants alike.

 

[steveo922]

Just outta curiosity, what happens when you notice that their ID and card (or in your scenario the fingerprint) does not match because a friend, family, girlfriend/boyfriend etc ‘borrowed’ their cards to pay?

 

[paul7979]

I can’t imagine someone would be brave enough to use a fraudulent card and give their fingerprint while doing it

Why not? They give us their phone number and address to deliver their pizzas to while using stolen cards. Who is going to press charges against them? Visa/MC doesn’t care, the person whose card is used doesn’t lose any money. And we the merchant, the only party to lose money in this process, are not considered a victim and can not file a criminal complaint. Why would they hesitate to give their fingerprints when they know they do not have to worry about punishment.

 

[pizza2007]

Visa/Mastercard understand that fraud is a concern for all parties involved and most likely it will never go away, they are constantly trying to stay ahead of the fraudsters

ROFL. If VISA/Mastercard were liable for fraud, they’d fix it, quickly. This whole thing is just like the great insurance debate. Bottom line: they can do whatever they like, whether its denying coverage, denying benefits, or raising rates.

Its a privilege to accept VISA/Mastercard, and by doing so, we permit them to do whatever they like.

 

[SolutionsGal]

steveo922:

Just outta curiosity, what happens when you notice that their ID and card (or in your scenario the fingerprint) does not match because a friend, family, girlfriend/boyfriend etc ‘borrowed’ their cards to pay?

Merchants know they aren’t supposed to accept a card transaction of the card holder isn’t the one who signs for it. They assume all the risk when they do just that. Now, having said that, I know that you have repeat clients who may be at work and the kids are at home, so the client calls up and says deliver the order. The card holder rule applies, but you know these customers, they are part of your client base, so if there is a problem, you can contact them. Right now I don’t think there is a perfect solution that will solve everyone’s issues. The best possible scenario is for all merchants to follow the “Best Practices Guide” as closely as possible, to keep the fraud and chargebacks to a minimum.

 

[SolutionsGal]

paul7979:

I can’t imagine someone would be brave enough to use a fraudulent card and give their fingerprint while doing it

Why not? They give us their phone number and address to deliver their pizzas to while using stolen cards. Who is going to press charges against them? Visa/MC doesn’t care, the person whose card is used doesn’t lose any money. And we the merchant, the only party to lose money in this process, are not considered a victim and can not file a criminal complaint. Why would they hesitate to give their fingerprints when they know they do not have to worry about punishment.

My thinking is this: If I own a business and someone has used a card fraudulently, and I now have their fingerprint, I’m going to do everything possible to get this person arrested and off the streets. Credit card fraud is Identity Theft and carries heavy fines and prison terms. In Tucson, we have a very aggressive County Attorney, who goes after everyone for NSF Check fraud and Credit Card Fraud. Get enough legal entities doing this around the country and you will slowly get people off the streets who are perpetrating this type of crime. You can’t fake a fingerprint very easily.

 

[Registered_Guest]

Diana,

But what incentive does the card company have to do anything to prevent fraud?

When fraud happens, they don’t lose any money - in fact, they probably make money. Why would they want to stop fraud if they actually make money from it?

Anyway, when there is a chargeback because of fraud (not a complaint about product/service) - why is the merchant charged a chargeback fee? That implies that the merchant is the only one responsible to stop fraud - and that puts us back to my question as to what incentive they have to do anything about it.

As Paul points out, the merchant is powerless in these situations. I can give you 100’s of examples, but here is a good one…

One day I was taking an order for delivery and remember that this same person had ordered a few days before - about $60 worth of food - to the same address. Of course, they were paying with credit card. She had all of the information, CVV code and all. The card authorized fine. Suspecting something, I told her to make sure she had the card ready to show the driver when he got there - to take an imprint. I told my driver to check the card when he got there - but he forgot. lol.

A couple of days later, same thing - same person calls, orders another $60 worth of food - I tell her the same thing about the card. This time I take the delivery. When I pull up near the house, I notice it is for sale and from what I could see through the windows from the street, it was empty. I drive straight by and stopped down the block. I called the police in the area (the station was only about 1/2 mile away) - told them the story and that I suspected someone had broken into the empty home and was using it to order food with a stolen credit card. Basically, they didn’t care - and wouldn’t do anything - because “nothing” had happened yet - i.e. I had no evidence that it was stolen.

So I took the delivery to the door, a young girl answered (and yes, the inside of the house was empty) - I told her I needed to see the card and of course “The person with the card just left to go to the store…”. Yeah.

A few weeks later, that special envelope showed up in my mail with the chargebacks.

The police do not care about this and do not have the time to chase down people using stolen or unauthorized credit cards to buy $20 worth of food. They don’t now and they never will.

 

[paul7979]

I’m going to do everything possible to get this person arrested and off the streets. Credit card fraud is Identity Theft and carries heavy fines and prison terms. In Tucson, we have a very aggressive County Attorney, who goes after everyone for NSF Check fraud and Credit Card Fraud

My towns state attorney also prosecutes for NSF checks and I suppose they also would if a legal complaint was filed for credit card fraud. The problem is the merchant, who is the ONLY person out any money, has no legal right to file a complaint. The merchants identity was not stolen. The person whose “identity was stolen” files a chargeback and immediately gets the charges removed from their card and has no incentive to file a legal criminal complaint. The credit card companies don’t file a criminal complaint. No complaint = no state attorney involvement. Maybe if the credit card companies would give me the name and contact info of the cardholder whose info was used fraudulently, maybe I could convince them to file charges. But then again, they probably live in another city or state far away from here. Why would they care that I’m out $60.

 

[SolutionsGal]

I understand your frustrations, I too, have many complaints about how Visa/Mastercard rules and regulations constantly squeeze the merchant. When bad things happen, it is the merchant who is out the money. Is there a better solution? If you are looking at it from the merchants perspective, not making them pay for someone’s illegal deeds is sound common sense that no logical person would argue with.

Fraud is the fastest growing crime in this country, until law enforcement, the courts and card issuing entities get on the same page as to how important stopping this type of illegal activity is, it will continue to be a burden on merchants.

I think part of the problem is that credit cards were originally designed to be a face to face transaction, but they have evolved over time into what we have today, unfortunately, Visa/Mastercard didn’t put security measures in place as the evolution was taking place, and now it is like trying to close the barn door after all the livestock escaped. Visa/Mastercard need to find a secure way of accepting cards that eliminates fraud forever.

 

[Registered_Guest]

I still contend that Visa/MC has no incentive to stop fraud. They make money from it.

Sometimes when I get a chargeback for a stolen card, they include a list of the other merchants that were involved. Many times this list is 2 pages long, usually containing thousands and thousands of dollars worth of charges. Most of the time the majority of the charges are for paying electric, cable and telephone bills, and pizza places. And they span over a 30 day period.

I’ll never understand how that can happen. First of all, didn’t the person notice that there card was missing and report it? Second, when someone pays 20 electric bills in one month on their card, that should raise a flag.

But again - VISA/MC doesn’t care - they just made over $1000 in chargeback fees on that one card alone!

 

[paul7979]

But again - VISA/MC doesn’t care - they just made over $1000 in chargeback fees on that one card alone!

I do not think that Visa and M/C get any money from chargebacks. I think chargeback fees are charged by the processors. That said, allowing this fraud to continue may well be Visa/MC’s way of throwing a bone to those who collect their fees for them. Still no incentive for them to stop the fraud.

 

[Registered_Guest]

Yeah, when I say VISA/MC in the above posts - I’m talking about anyone other than the merchant. Heck, I can’t keep up with how many people have their hands in the pot between the customer and the merchant!

 

[brad_randall]

Diana,

What is the viability of cellular processing? I’ve been thinking I’d like to trade the problems that come from keying in 75% of my credit cards with those that come from having drivers carry around portable processing units. In general, do the saving from swiping every transaction offset the costs of the cellular connections and repair/replacement of portable terminals?

 

[SolutionsGal]

Brad,

The only way to determine if you would be saving money is to do an analysis based on your monthly fees and volume.
Yes, you would save money by swiping the card, however, you run into the problem of making a pizza before you know that you would have it paid for. So in order to give you detailed specifics I would need to know alot more information. You can PM me if you want to investigate this further.

 

[Daddio]

Brad,
I have been using a portable unit for debit for 4 years and just started using it for credit card transactions. Since I am in Canada I don’t expect the same rates apply but the units have saved me about $50 a month over keying in the card number for a pre-authorization.

There are other considerations as well. Some customers are reluctant to give their card number over the phone, with the portable CC maachines this is no longer an issue. The customer now has the ability to use an alternate card if necessary.

 

[famouspizza]

paul7979:

But again - VISA/MC doesn’t care - they just made over $1000 in chargeback fees on that one card alone!

I do not think that Visa and M/C get any money from chargebacks. I think chargeback fees are charged by the processors. That said, allowing this fraud to continue may well be Visa/MC’s way of throwing a bone to those who collect their fees for them. Still no incentive for them to stop the fraud.

yup, the processors are screwing us

Just found this out for myself today for the 1st time…my processor charged me the $20 for a chargeback…long story short his card info was stolen and he called his company that night to notify that all charges that day were invalid…problem is he ordered delivery for lunch…so my POS receipt showing his signature, date time, address, etc did not mean anything because I did not have a manual imprint so I am out the $40 order plus $20 chargeback.

Customer apologies for the mistake and gives me the $$ for the order…after a half hour with RBS I get the charge waived.

If we treated our customers like this we would all be on the streets

so are you guys getting manual imprints on all deliveries that are manually entered to avoid this?

 

[brad_randall]

I just read about this regarding processing credit cards “at the door”:

IPhone credit card swipe war heats up - Feb. 9, 2010

A “swipe war” sounds good to me. Maybe I’ll just equip all my drivers with iPhones before very long.