Credit Card Merchant Account Authorization Procedures

In order for credit card merchant account users to accept payments, they have to first obtain an authorization approval, before finalizing any sales. If there are delayed deliveries of purchased items, the retailer is mandated to get an approval before submitting the payment data to the merchant services provider for the transaction. The issued authorization decision is valid for the following ninety days.

The payment acceptor can ask for the transaction authorization approval from its acquirer either through its payment processing terminal or by phone. The processor will then produce an authorization response code that needs to be printed out on the receipt in case it was not obtained by a POS machine or cash register, in which case it will need to be transmitted to the processor, together with the entire and authentic contents of the mag-stripe of the offered card during the payment for each single sale, as well as each individual authorization request it sends to the processor.

If credit card merchant account users accept credit cards for a transaction without first obtaining an authorization approval as stated above, the acquirer is not mandated by industry regulations to pay the retailer for the amount of the payment, and in case the acquirer has already paid the amount, it may, and probably will, initiate a chargeback, leading to the retailer to lose the whole sale's amount. Even in case the authorization was obtained for the payment, though, it is not a guarantee that the retailer will indeed get paid. Any sale may be charged back to the credit card merchant account user for any number of reasons that I have written about at some length in other posts and will probably do it again in the near future.

At times, for validation purposes, the acquirer may ask the card acceptor to request more details from a customer who has produced a card.

If the card acceptor uses a POS device to accept payments, it will need to implement the instructions given to them by their device manufacturer for the use of that machine. If a "call center" or "call" authorization code is shown on the device's monitor, the card acceptor needs to call the processor's call center for details and further instructions.

In order to obtain an telephone authorization, the card acceptor will have to be ready to provide the following details:

• Sixteen-digit card number.
• The credit card merchant account user number, as issued by the acquirer.
• The four-digit card expiry date.
• The whole amount of the payment, together with tax and tip, if there is one.

Upon obtaining an approval, whether by phone or through the POS device, the merchant can finalize the payment.