WATCH That Receipt! Partial Authorizations

Monday, April 2, 2018

partialauth

U.S. merchants are prohibited from splitting credit card transactions, which they may be tempted to do when the total transaction amount exceeds the authorization limit stated in their processing agreements. In such scenarios, merchants would request multiple authorizations for portions of the total transaction amount, which would all be lower than the limit. We have advised you not to do that, because you will eventually be found out and pay the price for your misbehavior.

Merchants are prohibited from splitting credit card transactions, which they may be tempted to do when the total transaction amount exceeds the authorization limit stated in their processing agreements. In such scenarios, merchants would request multiple authorizations for portions of the total transaction amount, which would all be lower than the limit. We STRONGLY advise our merchants not to split transactions because doing so can lead to the loss of your ability to accept credit cards all together.

There is one scenario where the splitting of the trasnaction is allowed and it is called a PARTIAL AUTHORIZATION.

Partial authorizations are used for prepaid and check / debit cards and are now supported by the Card Associations, as well as their issuers and payment processing companies. They make it possible for merchants to complete a transaction by using the remaining available balance on the prepaid or check card and accepting an additional payment form (e.g. cash, check or another bank card) for the remaining balance. This type of transaction is known as “split tender.” 

Discover stated, “With the rise of prepaid and gift card usage, what we’re seeing is more declines at the point-of-sale due to a merchant terminal not having the partial authorization component enabled. That means if a customer buys $50.00 worth of items, but only has $40.00 on their gift or prepaid card, their card could be declined. This creates a poor customer experience at the merchant location, as well as for the company associated with the gift or prepaid card.”

A partial approval occurs when a Gift Card is used (Visa/MC/AMEX prepaid cards) that have a lower balance that the requested authorization amount;  the processor approves the transaction for the amount that is left on the card. The merchant then must collect the balance with an alternative payment source such as cash or another card. The though proceess being that cardholders will attempt fewer purchases that exceed their available balances, leading to fewer declines at the POS.

HERE IS HOW A PARTIAL AUTHORIZATION TRANSACTION WORKS:

The customer swipes a card with available balance that is lower than the sale’s amount.

The merchant submits an authorization request with a Partial Authorization indicator to the issuer for the entire sale’s amount.

The issuer sends a partial authorization approval back to the merchant.

The POS terminal subtracts the partially approved amount from total sale’s amount. In a full service restaurant, the POS device will print out two receipts — one displaying only the partial authorization and a second receipt displaying the remaining balance due plus a blank field for the tip.

The customer makes a payment for the remaining balance using cash, check or another card.

The sale is now completed and a receipt is printed displaying the split tender amounts. The current card balance may also be shown (in what is known as “Balance Return”) in one of two ways:

       If less than $200, the POS device prints the exact balance (for example, “Balance Remaining: $54.27”).

       If more than $200, the POS terminal prints “Confirmed,” instead of the amounts (for example, “Balance Remaining: Confirmed”).

Partial authorizations provide you with a way to eliminate declined authorizations due to insufficient funds. It is IMPERATIVE that you train your staff to review the copies of the credit card receipts to insure that you receive proper payment! 

Please note, that TMC routinely has the PARTIAL AUTHORIZATION turned OFF for all other card types- so the Partial Authorization issue should only occur when you are presented with a Prepaid Gift or Debit Card.

At the end of the day, it is important to make sure you are getting paid for your products and services while still creating a pleasant payment experience!  This little feature can help you do both!

Cheri Perry 4/2/2018

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