Account Verification by Processor

• MasterCard and Visa misuse fee

• Best practices for account verification

• How Paymetric Gateway (XiPay) handles account verification by processor

• Response handling

Merchants can send a $0 or $1 authorization along with the expiration date and sometimes AVS or CVV data to verify a payment card is valid before an actual authorization is submitted. This is the preferred method for account verification for most processors and the four main card types: VISA, MC, AMEX, and Discover and indeed is the only method when processing VISA® or MasterCard® transactions to avoid a misuse fee.

The misuse fee is only applicable for Merchants based in the U.S.

MasterCard and Visa misuse fee

VISA and MasterCard both charge a fee per misused authorization. VISA defines a misused authorization as: “Authorizations that are not followed by a matching clearing transaction (or in the case of a canceled or timed-out authorization, not properly reversed).’’ MasterCard has a similar Processing Integrity Fee that will be assessed per occurrence when authorized (approved) transactions cannot be matched to a clearing settlement record or an authorization reversal.

To avoid these fees, merchants should implement “pre-authorizations” (a.k.a. card verification transactions) as a $0 authorization with the preauthorized flag and if required/desired, the expiration date, AVS or CVV data as well. Note that AVS and/or CVV may be required for pre-authorizations by certain processors.

In instances where only a $1 authorization is possible, an authorization reversal should be implemented within the designated timeframe to avoid the fees. You should check with your Account Manager at the Processor for the this timeframe.

Best practices for account verification

As of September 18, 2014, Paymetric Gateway (XiPay) converts authorizations that are marked as a pre-authorization to the appropriate amount of either $0 or $1 depending upon what the processor supports. So, for processors that do not support $0 authorizations, the Paymetric Gateway (XiPay) platform will convert the $0 authorization to $1 as long as the pre-authorization flag is set. This is applicable for all Paymetric processors for VISA, MasterCard, American Express, and Discover card transactions, except CyberSource.

Triggering account verification

The logic in Paymetric Gateway (XiPay) to convert to the values defined in the table below is triggered by the combination of the presence of the Preauthorization Packet field set to any value AND an amount of either $0 or $1.

How Paymetric Gateway (XiPay) handles account verification by processor

The value that Paymetric Gateway (XiPay) will submit to a given processor for each of the four main card types that support pre-authorizations, and Any exceptions related to pre-authorization transactions for a given processor are defined below for each processor.

Response handling

Merchants should always code against the XiPay StatusCode field for determining if a pre-authorization was successful or not. Successful pre-authorizations will return a StatusCode of ‘100’. It is important that the Message or AuthorizationCode NOT be used. This is because some Card Issuers do not return an Auth Code for $0 Authorizations and also because some processors return various descriptions in the Message field.