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Prohibited Credit Card Transactions

Merchants who accept credit cards must be aware of prohibited transactions and the penalties that can be imposed if a prohibited transaction is completed. A prohibited transaction is one that does not comply with the operating regulations of the Visa or MasterCard associations, and/or policies and procedures as defined in the EXS Merchant Agreement. If deposited, sale drafts involving prohibited transactions will be subject to chargeback and may lead to termination of the EXS Merchant Agreement, perhaps immediately!

The following are examples of prohibited transactions:

  • Processing transactions to cover previously incurred debts (Visa allows if existing debt transactions are identified properly and account is not in collection), or bad debt such as bounced checks, or payment for returned merchandise
  • Processing a sale on a previously charged back transaction
  • Accepting transactions that are declined by the Authorization Center
  • Attempting multiple authorization requests following a decline
  • Accepting cards with an invalid effective date
  • Accepting expired cards
  • Using a split sale to avoid authorization requirements
  • Giving cash to the cardholder
  • Delivering goods or performing services after notice of a cancellation by the cardholder of a preauthorized order
  • Billing card after notice of cancellation of recurring payment
  • Accepting transactions where the signature on the Visa or MasterCard card and the one on the sales draft are not the same
  • Engaging in factoring (draft laundering) or accepting or depositing drafts from other banks, merchants or businesses which you may own or purchase, but are not explicitly listed in your current application (or supplements to it) currently on file with us.
  • Laundering of deposit drafts will likely result in the immediate termination of your merchant bankcard privileges
  • Depositing a sales draft twice
  • Depositing a sales draft in one or more financial institutions for payment before or after you deposit it with EXS.

Educate your staff about prohibited transactions to reduce the risk of accepting counterfeit or fraudulent card transactions. A fraudulent transaction could involve an invalid account number, or a valid number with unauthorized use. Unauthorized use of a lost or stolen card is one of the greatest contributors to fraud losses.

In the case of stolen cards, fraud normally occurs within hours of the loss or theft - before most victims have called to report the loss. Checking the signature becomes very important in these first few hours of loss. Also, keep in mind that the thief may have altered the signature panel, or re-embossed the card, to change the account number slightly.








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