Understanding Credit Card Procedures

Understanding Credit Card Procedures

To operate your business, you need to perform several procedures that vary according to the type of payment.

Credit cards are the most common forms of payment. In addition, card types include Visa- and MasterCard-branded debit cards, which are processed in the same manner as credit cards. With these cards, you can perform authorizations, captures, credits, sales, voids, and you can reconcile your account.

An authorization ensures that your customer’s credit card account is open, is in good standing, and has funds available to complete the purchase. Because an authorization does not move money into your bank account, you must capture the authorization, but you can do so only after you ship the customer’s order, as required by card associations. For more information on capturing an authorization, see Captures.

An authorization is good for 7 days for Visa and 30 days for all other card types. Although you can use an authorization older than 7 or 30 days to capture an order, you may be charged higher interchange rates. Some processors can re-authorize older authorizations on your behalf.


	All payment processors, except TSYS Acquiring Solutions, decline authorizations for card types for which the merchant is not configured to accept. On the other hand, TSYS declines capture requests for card types for which the merchant is not configured to accept, most commonly American Express and Discover. Therefore, after going live, you must run test transactions for every card type that you wish to accept and verify that funds are transferred to your merchant account.

Authorization Process

The following steps take place within seconds when you request a credit card authorization.

Step 1

Your customer places an order and provides the credit card number, the card expiration date, and other information about the card.

Step 2

You send a request for authorization over a secure Internet connection.

Step 3

CyberSource validates the order information and performs the Smart Authorization tests. See Configuring Smart Authorization for details about Smart Authorization.

Step 4

CyberSource contacts your payment processor to request authorization.

Step 5

The payment processor sends the transaction to the card association, which routes it to the issuing bank for the customer’s credit card.

Step 6

The issuing bank approves or declines the request. It also uses the Address Verification Service (AVS) to determine whether the customer provided the correct billing address.

Step 7

CyberSource tells you whether the authorization succeeded.

Electronic Authorization

Most of the time, you use electronic authorization requests to process your orders successfully.

Verbal Authorization

Sometimes you need to call to obtain an authorization code verbally. When you set up your account, you receive the information that you need to call for a verbal authorization. You can call for a verbal authorization in these cases:

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When a card’s magnetic strip is demagnetized, or the card is expired or invalid. For more information, see Verbal Authorization Required (processing) and Verbal Authorization Code Needed (searching an order with verbal authorization).

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If your payment processor is TSYS Acquiring Solutions (Vital), stand-alone verbal authorizations are available for card-not-present transactions. You can obtain a verbal authorization code and later use this code to process a credit card transaction in the Virtual Terminal. You can use this option in conjunction with Level II fields. You can process a verbal authorization only with the same processor that gave you the verbal authorization. Otherwise, the transaction will fail. For information about processing, see Card-Not-Present: MOTO or Internet. After processing, these transactions are indistinguishable from other credit card transactions.

A capture tells your acquiring bank to deposit money into your account. Credit card associations require that you request a capture only after you ship a customer’s order. To request a capture, you must have a successful authorization that has not been captured.

Capture requests are processed in batches. In other words, money is not transferred as soon as you request a capture. All the requests for a day are placed in a batch file and settled nightly. It usually takes two to four days for funds to be transferred.

Step 1

You send a request over a secure Internet connection.

Step 2

CyberSource validates the order information and stores the request.

Step 3

After midnight, CyberSource sends the batch file to your payment processor.

Step 4

The payment processor settles the request and transfers funds to the appropriate bank account.


	If your processor is TSYS Acquiring Solutions (Vital), do not send an order or settlement request with an amount greater than $99,999.99 because TSYS Acquiring Solutions will automatically reject your request. The amount limit applies to all payment types and whether the settlement request contains one payment type or a combination of payment types.

If you fulfill the order at the same time that you authorize the credit card, you can request authorization and capture at the same time, which is called a sale transaction.

Card associations require you to ship the customer’s order before you capture an authorization. Do not request a sale transaction unless you fulfill a customer’s order immediately (for example, if your customer pays for access to a Web site, or if you are using the Business Center to process payments in a retail store).

The method that you choose to process a credit in the Business Center depends on the time elapsed after the debit. Credits are discussed on Crediting Orders.