batch Payment Return Reversal

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2 Customer Order batch Retail Transaction End of day Cancel Void Return Payment Return Payment System Acquirer, Loyalty Reversal Check out payment post void

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4 POS/Terminal Payment Processor Card Issuer Request Authorization Contact Card Issuer for Authorization Returns Authorization Response Returns Authorization Build Batch of approved Transactions

5 POS/Terminal Payment Processor Card Issuer Request Balance & Settlement Return Settlement Control Number Verifies totals - closes batch and routes for settlement

6 POS/Terminal Payment Processor Card Issuer Retrieve Totals the next day Automatically Close Batch & Routes for settlement

7 POS/Terminal Payment Processor Card Issuer Request Authorization Contact Card Issuer for Authorization Return Authorization Response Return Authorization Response Build Batch of Approved Transactions

8 Balance & Settlement -At the end of the working day, or multiple times throughout the day, the merchant may balance a group of transactions and settle them - Host Based Time-Initiated Settlement - automatically closes the merchant's host computer batch file at the cut-off time, guaranteeing at least one daily balance and settlement for the merchant. This function does not require the merchant to b lance the paper sales slips to the electronic batch. However, because the electronic batch is not checked against the signed sales slips, merchants using this system run the risk of higher adjustments and possibly higher retrieval/charge-backs. - Host-Based Merchant-Initiated Balance & Settlement - the merchant checks the cumulative batch totals using the item number and batch total amounts on the paper sales slips, and then initiates the balance process with the host computer. The host computer does not tell the merchant what totals it is holding. Instead, the merchant enters the total item count and batch balance based on the paper sales slips, which the host computer then compares with the totals it is holding for the electronic batch. - Terminal Capture Exception upload - option is best suited for an environment such as general retail, in which the transaction amounts and settlement amounts are usually the same. The POS device must authorize all transactions online or use a method of transmitting all off-line transactions to the Host prior to attempting a balance. the merchant initiates settlement by transmitting the totals to payment processor. These totals include the number of items and net dollar amount for all purchases and returns, for both credit and debit cards. If the POS device totals match totals stored on the Host computer, the payment processor closes the batch of transactions on its Host computer and out clears them. If the totals differ, the host will return an out-ofbalance message along with the totals that do not agree. Then, one of two things will happen: The merchant can print out a listing of transactions that are out-of-balance, make adjustments, rebalance and re-settle. Once the totals agree, the host computer can close the batch and out clear the transactions. The POS device should also close the batch at this time. The POS device uploads all the stored transactions to the Host. The Host replaces the transactions it collected with the transactions from the POS device and out clears the data. - Terminal Capture Upload - best suited for an environment in which the transaction amounts and settled amounts are rarely the same, such as in the travel and entertainment or mail order/telephone order industries. The POS device builds a batch of approved transactions. This batch will be transmitted to the host, and the data will be settled and out cleared. Purchase -used for the purchase of goods or services Purchase with Cash Back - used with debit cards when the customer wishes to authorize funds in addition to those required for a purchase Incremental Authorization -increases the amount of a previously authorized transaction. Incremental Authorizations are required by some card associations in order to bring the authorization and clearing amounts within specific tolerances Return - the merchant refunds the electronic funds previously obtained from the cardholder's credit or debit card account Force -used to insert previously authorized, but not captured, transactions into a batch. Store & Forward - used when the Debit authorization system is inoperative Pre-authorization - used to verify funds when the total amount of the purchase is unknown

9 Store & Forward - used when the Debit authorization system is inoperative Pre-authorization - used to verify funds when the total amount of the purchase is unknown - Credit Card used to authorize an estimated total (for example, in a restaurant to authorize the purchase amount and estimated tip). -Debit Card -the card issuer places a hold on the cardholder's account for the preauthorized amount until 1) the merchant processes a matching Pre-Authorization Completion, or 2) a pre-determined time-out is reached. The debit Pre-Authorization transaction does not move funds from the cardholder's account. When the actual purchase amount is known, use the Pre-Authorization Completion transaction to actually transfer funds. Pre-Authorization Completion Used to enter the final amount of a Pre-Authorized transaction Override- is a necessary part of the transaction set for those merchants who choose to use duplicate checking where they can override a duplicate transaction. Adjustment -used to edit the information on the host for a previously completed credit card transaction. Reversal - Communications or System Reversals are generated due to a problem in successfully delivering the response to the POS device. The host handles communications reversals for asynchronous transactions by automatically reversing any transaction for which an Acknowledgement was not received from the POS device. - Leased-line and synchronous dial-up customers must generate their own reversal request in the case of a communications failure. A communications or system reversal could apply to both credit and debit card transactions. For debit cards, the reversal must be executed within 2 minutes of the original authorization request. Partial Reversal - decreases the total authorized amount of a previously authorized transaction. Void - used to entirely back out a credit or debit card Purchase transaction. A Void transaction applies to all transactions that were entered into the current batch, and only for the full dollar amount of the original transaction. Voucher Clear - online request to clear a previously authorized voucher transaction, where a voucher number and authorization number were assigned. Voucher Clear Transactions are only for Food Stamp POS transactions the POS device prompts for check related information, such as checking account number, as well as the amount of the purchase. It then transmits this transaction information to payment provider. The payment provider verifies that the account number is not on a negative file. If the account number is not on the negative file, the payment provider sends an approval code. If the account number is on the negative file, the payment provider sends a denial response. Check Verification -for merchants who use a check verification service Check Guarantee - for merchants who use a check guarantee company to authorize and guarantee payment on personal checks Balance Inquiry - allows the merchant, at the cardholder's request, to verify the funds available in a debit cardholder's account Force Balance - If the host returns an error message as a result of the Balance transaction, indicating that the totals entered at the POS device do not match the totals the payment processor is holding, the merchant should use the Host Review and Adjustment transactions to identify and correct any problem transactions. However, if the merchant cannot identify the problem, s/he can use the Force Balance transaction to override the out-of-balance condition. When the host receives a Force Balance request, it closes the batch on the host and settles it as though the merchant submitted totals that matched the information on the host.

10 transaction to override the out-of-balance condition. When the host receives a Force Balance request, it closes the batch on the host and settles it as though the merchant submitted totals that matched the information on the host. Host Review Clear Host - Under very rare circumstances, it may be necessary to clear the transactions in the currently open batch on the host. When it receives a Clear Host transaction request, the host deletes the detail records for the transactions in the currently open batch, and clears the item counts and cumulative dollar amounts for the batch. The merchant must then use the Force transaction to re-enter the transactions from the paper sales slips before attempting to balance the batch for settlement