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Credit Card Acceptance and Management with a Fraud Twist

Credit Card Acceptance and Management with a Fraud Twist. Jennifer Watkins Manager, Credit Card Services June 25, 2009. Quiz. What was the very first charge card?. 8/26/2014.

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Credit Card Acceptance and Management with a Fraud Twist

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  1. Credit Card Acceptance and Management with a Fraud Twist Jennifer Watkins Manager, Credit Card Services June 25, 2009

  2. Quiz What was the very first charge card? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 2

  3. Quiz Air Travel Card (aka UATP) AA claims to be the issuer of the very first charge card in 1936. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 3

  4. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 4

  5. Overview Credit Card Settlement Flow 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 5

  6. Current Process Non-bankcard Settlement Process Cardholder Customer Billing ARC Travel Agent

  7. Current Process Bankcard Settlement Process Acquiring Bank Customer Billing Issuing Bank ARC Cardholder Travel Agent Association/ Clearing House

  8. Current Process UATP Settlement Travel Agent Cardholder Customer Billing ARC Airline ATCAN

  9. Quiz In 1974 what percentage of transactions processed through ARC were credit card? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 9

  10. Quiz 80% cash 20% credit card 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 10

  11. Quiz In May 2009, what percentage of transactions processed through ARC were credit card? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 11

  12. Quiz Credit card sales were 88.9% Down from 90.2% in October 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 12

  13. Discussion Topics – with a Fraud Twist Credit Card Refunds Credit Card Acceptance Credit Card Chargebacks ARC Initiatives Industry Initiatives

  14. Discussion Topics - With a Fraud Twist Credit Card Refunds

  15. Credit Card Refunds Can a Refund be done to a credit card that was not the original form of payment? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 15

  16. Credit Card Refunds Yes, when the initial transaction was exchanged and a new form of payment was used for the additional collection amount. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 16

  17. Exchange Transactions The new form of payment on an exchange is associated to the transaction so a full refund can be done to the new form of payment. Example 1. $1,000 ticket paid with an American Express 2. Ticket Exchanged for new ticket, additional collection of $25.00 paid with Visa. 3. Full $1, 000 ticket can be refunded to the Visa card ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding.

  18. Discussion Topics – With a Fraud Twist Exchange transactions that are Refunded Credit Card Acceptance

  19. Credit Card AcceptanceResources for Agents Industry Agents’ Handbook 8.0 - General Guidelines 8.2 - Authorizations 8.4 - Credit Card Chargeback Policy Credit Card Acceptance & Chargeback Tips for Travel Agents Red Flags Checklist

  20. Credit Card Chargeback Policy Credit Card Chargeback Policy Created in 1992 – no major updates since Provides agents with protection from chargebacks in a face-to-face environment. Signature and imprint required. Response timeframe requirements. Travel agents, like carriers are taking the liability in a non-face-to-face scenario. Encourage carriers to use the information available from the agents to support the chargeback. Success rates are surprisingly high.

  21. Credit Card Acceptance & Chargeback Prevention – Tips for Agents Guide http://www.arccorp.com/forms/cc_chargeback_tips.pdf Provides agents with information about: What they should do when accepting credit cards Tools they can use to better identify fraud. Tips for responding to chargebacks Red flag Checklist Information about PCI Data Security Standard Additional Links

  22. Red Flags Checklist RED FLAG CHECKLIST FOR ACCEPTANCE OF CREDIT CARDS There is risk associated with accepting any credit card transaction. You need to decide what level of risk you are comfortable with prior to issuing a ticket. The following are guidelines created to assist you in evaluating the risk associated with a credit card transaction. LOW RISK Caller ID identifies caller as local Passenger is also cardholder Agent obtains manual imprint of unexpired and unaltered credit card in the travel agency Agent obtains valid signature and approval code Signature is an approximate match to that on back of the credit card Originating airport is in the same region as the travel agency Destination is in the same region as the travel agency Established customer Domestic travel Date of departure is more than one month from date of issue MEDIUM RISK Caller ID identifies caller as local. Originating airport is in the same region as the travel agency. Destination is in the same region as the travel agency. Passenger may or may not be cardholder. Customer is new. Domestic or international travel. Date of departure is less than one month from date of issue. HIGH RISK • Caller ID identifies caller as out of area or with no information at all. • Agents are usually contacted for the first time via, website, email or the TTY service (for the hearing impaired). • Cardholder is not the passenger. • Credit card, driver’s license, passport faxed/emailed because cardholder is never present in the agency. • Several tickets are purchased with different routings, travel dates and passenger last names using a single credit card. • “Customer” may use a religious title (e.g., Pastor Robert) or a religious premise (Missionaries to Africa) or other socially respected profession, e.g., doctors, to establish credibility. • Email requests contain obvious spelling errors (e.g. cities and states). • “Customer” uses airport codes in their emails, i.e., asking for tickets from ACC to LHR rather than Accra to London. • “Customer” provides fictitious address and phone number in the U.S. • Email address is from a free service (Yahoo, Hotmail, Gmail, etc.). • Customer/passenger name is new to agency. • Domestic or international travel. • Customer not concerned with ticket price or service fee amount. • Last minute travel. • Highly flexible travel schedule. • Customer offers multiple credit cards as payment if first credit card is rejected. • Customer can be contacted only via a cell phone with an area code not in the same region.

  23. Discussion Topics – With a Fraud Twist Exchange transactions that are Refunded Credit Card Acceptance Credit Card Chargebacks

  24. Credit Card Chargebacks Do Not Recognize In approximately 35% of cases providing information about the travel agency provides resolution. Airlines that provide the information they receive from travel agents have good success in defending the transaction. It is a win/win when carriers work with agents rather than simply pushing the chargeback to them in the form of a debit memo.

  25. Quiz What information can provide support against a “refund not received” chargeback on a non-refundable ticket?

  26. Credit Card Chargebacks Terms and Conditions

  27. Credit Card Chargebacks Terms and Conditions

  28. Credit Card ChargebacksTerms & Conditions – Click to Accept Airlines are having success supporting specific chargeback types when they have demonstrated that the internet purchaser must “click to accept” the terms and conditions of the sale. Same is true for on-line travel agency sales even when the carrier is the merchant.

  29. Quiz Is it possible for a travel agent to initiate a credit card sale without obtaining a valid approval code? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 29

  30. Quiz Yes 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 30

  31. Credit Card ChargebacksNo Approval Code Obtained Agents have the ability to key an approval code into the System Provider System. ARC provides phone numbers for agent to call to obtain a voice authorization. Have your acquirer review the authorization logs to determine if the agent obtained a valid approval code.

  32. Automated Authorization ProcessVisa and MasterCard 2. Travel Agent requests Authorization 3. Authorization request sent to appropriate association end point 1. Customer purchases ticket 4. Bankcard Authorizations sent to card Issuer Card Issuer System Provider/GDS Travel Agent Cardholder 6. Response Returned to System Provider 5. Issuer Responds 7. Response provided to Travel Agent 8. If approved, Agent Tickets Transaction.

  33. Automated Authorization ProcessAmerican Express 1. Customer purchases ticket 2. Travel Agent requests Authorization 3. Authorization request sent to American Express 4. American Express Return a response to System Provider System Provider/GDS Cardholder 6. If approved, Agent Tickets Transaction. Travel Agent 5. Response provided to Travel Agent

  34. Manual Authorization ProcessVisa and MasterCard 3. Authorization request sent to appropriate association 2. Travel Agent calls for voice Authorization Bank of America 1. Customer purchases ticket 7. Response provided to Travel Agent 6. Response Returned to B of A 4. Bankcard Authorizations sent to card Issuer 8. Travel Agent keys approval code into GDS Cardholder Travel Agent Card Issuer System Provider/GDS 5. Issuer Responds 9. Agent Tickets Transaction.

  35. Manual Authorization ProcessAmerican Express 2. Travel Agent calls voice authorization service 3. American Express provides approval code 1. Customer purchases ticket 4. Agent keys approval code into GDS Cardholder System Provider/GDS 5. Agent Tickets Transaction. Travel Agent

  36. No Authorization Process (aka. “Fraud”, “Chargeback” or “Fee” 1. Customer purchases ticket 2. Agent keys a code into GDS 3. Agent Tickets Transaction. System Provider/GDS Cardholder Travel Agent

  37. Quiz What is a floor limit in the credit world? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 37

  38. Quiz The amount under which a transaction did not require an approval. Not applicable to airline ticket transactions. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 38

  39. Quiz What is a stand-in authorization? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 39

  40. Quiz When an authorization provider does not go through the link to the credit card company to obtain an authorization. The provider “stands in” and provides an approval. With Stand-in authorizations there is always a chance that it could end up being declined. In addition they are often tied to floor limits. This should not be happening with the System Providers in the U.S. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 40

  41. Discussion Topics – With a Fraud Twist Exchange transactions that are Refunded Credit Card Acceptance Credit Card Chargebacks ARC Initiatives

  42. ARC Credit Card Initiatives Travel Agency Name on Credit Card Statements International processing fees Verified by Visa/MasterCard SecureCode Tips for Travel Agents Guide (Completed January 2009) 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 42

  43. ARC InitiativesTravel Agency Name on Credit Card Statements Chargeback Discussion Group Survey - approximately 35% of travel agent chargebacks are “Do Not Recognize” Airlines have great success when simply by providing travel agency information. These can be avoided by including the travel agent name on cardholder statements. ARC is working with the credit card companies and encourages merchants to work with their representatives. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 43

  44. ARC InitiativesInternational Processing Fees Currency conversion fees International processing fees – fees assessed on transactions when there isn’t a currency conversion. Agents are concerned about inability to make the customer aware Chargebacks 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 44

  45. ARC InitiativesVerified by Visa/MasterCard SecureCode Verified by Visa Available on-line only Provides protection from fraud chargebacks MasterCard SecureCode Available on-line only Does not provide fraud chargeback protection but does have a lower interchange rate. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 45

  46. ARC InitiativesVerified by Visa/MasterCard SecureCode Changes to the Settlement process are required to support Verified by Visa An interface needs to be built so OTA can tie into Verified by Visa System Providers must make changes to the authorization messaging Changes are required to the System Provider Reporting Files (SPRF) coming to ARC ARC must make changes to receive new data on the SPRF files and output the new field to the Visa processors. The Visa processors must make changes to accept the new field and pass it through interchange. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 46

  47. Discussion Topics – With a Fraud Twist Exchange transactions that are Refunded Credit Card Acceptance Credit Card Chargebacks ARC Initiatives Industry Initiatives

  48. Industry InitiativesAmerican Express Enhanced Authorization Allows American Express to provide information to assist merchants to evaluate fraud risk. Including but not limited to: Customer phone number E-mail address IP address Ship to information including phone number and first/last name Need to encourage the System Providers to support it for travel agents. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 48

  49. Industry InitiativesMisuse of Authorization System Effective July 1, Visa settled transactions that don’t include full authorization response data will be subject to a misuse fee. Authorizations obtained that don’t include a corresponding settlement will be subject to a misuse fee. Includes transactions that are voided Includes transaction where a $1.00 CVV2 or AVS check was done. 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 49

  50. Quiz What are the seven credit card types that ARC processes? 8/26/2014 ARC PROPRIETARY AND CONFIDENTIAL. This document includes confidential information that is proprietary to Airlines Reporting Corporation (ARC). Disclosure of this document or any information contained herein to third parties is prohibited without the prior written consent of an authorized ARC officer. Obsolete versions of this document should be destroyed in a manner to prevent compromise of the information, e.g., shredding. 50

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