American Express chargeback disputes work differently than Visa and Mastercard.

One of the main reasons American Express chargeback disputes differ is because American Express operates differently than other card networks. Unlike Visa and Mastercard, American Express has their own financial institutions that issue credit cards to consumers.

What Happens after a Customer Disputes a Transaction?

The American Express chargeback dispute process may look complicated at first glance. So we are going to breakdown the entire process step-by-step, so you will understand exactly how it works.

The process is initiated if an American Express cardmember contacts American Express to dispute a transaction. A customer might dispute a transaction for a number of reasons, including undelivered goods or services, dissatisfaction, or more.

American Express will review the customer’s dispute and act in one of THREE ways:

1. Dismiss the case
2. Issue an immediate chargeback to the customer
3. Send you (as the merchant) an enquiry

Most merchants won’t ever receive an enquiry unless American Express doesn’t have all of the information they need to settle the dispute.

In the event that you receive an enquiry, here are four ways to respond:

Four Ways to Respond if you have been Issued an Enquiry

Whether you have been issued a chargeback or an enquiry, you have 20 days to respond. Cardmembers aren’t subject to the same time restrictions. They are free to dispute a transaction at any time.

Within the 20 day period, here are four ways to respond if American Express gets in touch with you for a transaction dispute:

1. Authorize the chargeback
2. Issue a credit to the customer (or prove that you have already issued credit)
3. Issue partial credit
4. Provide sufficient evidence to validate the charge

Chargeback disputes can happen to any business, but you’re going to want to keep your chargeback levels to a minimum. Exceeding the chargeback threshold set by card associations could land you a spot on a chargeback monitoring program.

The best way to avoid chargeback disputes is to prevent chargebacks altogether. Here’s how…

How to Prevent American Express Chargebacks:

• Process credit immediately and let cardmembers know when they will receive a refund
• Share the return or exchange policy before completing the checkout process
• Ask for the Card Identification Number
• Use the Automated Address Verification Service
• Keep dissatisfied customers in the loop about the steps you are taking to resolve the dispute
• Obtain the customer’s signature for items picked up in store, work orders, etc
• Bill customers after products are shipped or service provided

Need Help with an American Express Dispute?

If your business has been subject to an American Express chargeback dispute, or if you have received an enquiry – you need to act fast.

Get in touch with us right away so we can help you successfully navigate a chargeback dispute with ease and confidence.

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Discover is one of the most popular credit cards in the U.S. today, alongside tried-and-true favorites like Visa, MasterCard and American Express.

It has gained popularity among younger consumers for its low introductory rates, no annual fees and rewards.

Despite its wild popularity, many businesses have chosen not to accept Discover cards because of Discover’s perceived “expensive” rates.

Is Discover really more expensive than card brands like Visa, Mastercard and American Express? Let’s find out…

What Fees Are You Required to Pay to Accept Discover Payments?

Every time a cardholder makes a payment with their Discover credit card, you pay what are known as interchange fees or card brand fees.

The interchange fees or rates are collected by Discover and are typically used to cover the following costs:

Credit and Debit Assessments

These fees can’t be avoided no matter which card issuer you choose. They are applied to gross credit and debit transaction volume and are paid directly to Discover.

International Processing Fee

If a customer makes a purchase using a card originating from outside the US, you will be subject to an international processing fee. You may or may not see the international fee on your statement depending on your pricing model.

Processing Integrity Fee

If a transaction doesn’t go through within a specific period of time, you may be subject to what’s called a processing integrity fee. Typically, the time window is 24 hours for “card present” transactions and 72 hours for “card not present” sales.

Card-Not-Present Surcharge

These are fees you might typically see in e-commerce or mail-order transactions when the card is not physically present. Because these are considered riskier transactions, the fee is slightly higher than “card present” transactions.

Account Status Inquiry Fee

This is a fee that is imposed when you verify cardholder information without actually charging the card.

While these fees may be collected by your processor, they are typically transferred in their entirety to Discover. You can think of these fees as the cost for accepting Discover credit cards in your store.

What Are The Current Interchange Rates for Discover?

Discover sets its interchange rates each year. They may go up or down or remain unchanged.

Here are the current U.S. Discover interchange rates:

* Please note that we have listed the most common interchange rate qualifications. Get in touch with Discover Card Network for a complete list of US interchange rates.

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Is Discover Right For Your Business?

Discover is quickly growing in popularity, especially among younger consumers.

Not sure if accepting Discover cards is right for your business?

Speak to one of our representatives to see how accepting Discover cards in your business may impact your bottom line.

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Mastercard has a special rate for card-not-present/e-commerce transactions. These are riskier transactions because of the risk of fraud, so they have a higher interchange rate. However, you can lower this rate by utilizing Mastercard’s SecureCode feature with the Universal Cardholder Authorization Field (UCAF). Mastercard SecureCode is called such because it requires the cardholder to enter a special code in order to make the purchase, thereby lowering the risk of credit card fraud.

As a result of lowering the risk of fraud, UCAF qualifies for a lower interchange rate than other card-not-present or e-commerce transactions. Further, there are two separate UCAF categories: “Full UCAF” and “Merchant UCAF.” Full UCAF interchange rates apply when both the merchant and the cardholder have SecureCode enabled, and Merchant UCAF interchange rates apply when only the merchant uses SecureCode.

As of April 12, 2019, the interchange rates for full UCAF consumer credit cards (dependent upon what type of card is used) are:

For merchant UCAF, the interchange rates are:

Debit and prepaid cards also have different rates for full UCAF and merchant UCAF. They are:‍

Compare the core credit card merchant UCAF rate to a core credit card key-entered transaction: the merchant UCAF rate is 1.68% + $0.10 while the key-entered transaction is 1.89% + $0.10!

At PayArc, we offer the option to set up your merchant account with MasterCard SecureCode. Not only will this reduce your risk of fraud, it can also save you money in credit card processing fees if you do a lot of card-not-present or ecommerce transactions. Call us today to find out more!

Level 3 credit card processing is a payment integration system that works with business-to-business transactions. It saves merchants in cost because in a B2B transaction, card networks have more information about both parties, which lessens the threat of fraud. The additional information that the card networks have includes what was purchased, where the purchase was made, and how much was spent, along with more than ten other data fields. Because of these extra “line item details,” card networks can offer much lower interchange rates for level 3 processing.

To qualify for level 3 processing, a merchant must accept certain payment methods issued by Visa or MasterCard. These methods include purchasing cards, corporate cards, or government spending accounts, and level 3 processing can only be used with these methods of payment. For example, even if you accept level 3 processing, that doesn’t mean that every transaction you process will have the level 3 interchange rate—just that when you process those specific payment methods, you will have the level 3 interchange rate.

Level 3 Interchange Rates

Visa has two categories for Level 3 processing fees: commercial and government spending account. They are as follows:

Mastercard has one category for Level 3 processing: Large Market Credit. The rate for this program as of 04/12/2019 is 1.90% + $0.10.

Card Eligibility

Not all cards are eligible for level 3 processing. Generally, business cards used by small businesses are not supported by level 3 processing, only corporate and purchasing cards belonging to governments or large businesses qualify. Since you can’t know just from looking at card whether it is eligible for level 3 processing or not it is more prudent to enter all of the information required for level 3 processing anyway, because while submitting irrelevant information can’t hurt you, not submitting potentially relevant information can hurt you in the form of not qualifying for the lower interchange rates.

Visa Requirements

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American Express Requirements

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Mastercard Requirements

hen a bank or credit card company contacts a merchant to inquire about a transaction, this action is called a retrieval request, or sometimes a “soft chargeback.” This can happen when the institution believes that a transaction may be fraudulent or if a customer does not recognize a transaction. Unlike a chargeback, this is just a request for information regarding the charge, the bank or credit card company is not currently disputing the charge.

Because a retrieval can be requested for up to 18 months since the date of sale, it is prudent to keep copies of your receipts through this period. You’ll want to contact the customer to explain the charge, and if they agree they’ll contact the bank to call off the impending chargeback. Similarly, you’ll want to contact the bank or credit card company requesting the information as well.

Once you receive a retrieval request, if you cannot contact the customer to explain the charge, it is advised that you proactively issue a refund before the bank decides to issue a chargeback. It is not advised that you wait to respond to retrieval requests, because failure to do so in a timely fashion can also result in a chargeback. From there, it is a separate process to dispute the chargeback, and this process can prove costly and time-consuming.

All businesses should be aware that their payment processor keeps track of all chargebacks in order to monitor fraud. Therefore, it is important to keep your chargeback ratio low to avoid looking suspicious. Too many chargebacks can result in your merchant account being terminated and in some scenarios your name or business can end up on MATCH.

Credit and debit card transactions have a processing fee associated with them that merchants must pay, this is referred to industry terms as credit card processing fees (for more information, click here). As a result, some businesses are reluctant to take credit and debit cards for small purchases. After all, these fees can add up quickly and when merchants see their processing statement at the end of the month, it can sometimes be quite shocking!

This is where cash discount comes in:designed to work for merchants who do lots of small-ticket transactions, cash discount is a program that allows merchants to pass the credit card processing fee to their customers by offering a discount for paying with cash or a check. This is different from a surcharge for credit and debit card users in that the“normal” price of the transaction is the price that credit and debit card users would pay, and customers that use cash or check would receive a discount. A surcharge would mean that the “normal” price of the transaction is what cash or check payments would cost, and those who pay with a debit or credit card would have to pay an extra processing fee.

The best example of Cash Discount is a Gas Station.  Gas Stations post two different prices, one for cash, and one for credit cards.  You can’t get any more straight forward than that.  Merchants using a Point of Sale (POS) software are able to increase prices to reflect the credit card processing fees, then at the time of check out, a discount for cash can apply.  Merchants using a menu would be forced to reprint or change posted menus.

Important: merchants must post the price for cards on the item, thereby making that price the “normal price.” If you post the price for cash and then charge the customer more for using a credit or debit card, that charge becomes a surcharge, which is prohibited by Visa and MasterCard rules, and also by law in several states: Colorado, Connecticut,Florida, Kansas, Maine, Massachusetts, and Oklahoma.

Is Cash Discount Right for Your Business?

That depends on what kind of business you run and how you run it. Do you process a lot of cash transactions vs. credit card transactions? Do you primarily deal with large tickets or small tickets?If you process lots of small-ticket credit card transactions, cash discount maybe right for you as those processing fees can quickly add up and affect your bottom line. However, you must also think that your customers won’t mind the new prices. If you have regular customers that strongly prefer their credit cards, they may choose to frequent somewhere else that does not do cash discount, which would mean that you lose out on the sale completely. Consider who your customers are and how this program will affect your business—if done correctly, you could save hundreds of dollars per year!

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