Authorization Best
B
Practiices for Pro
ocessing P
Prepaid an
nd Debit Trransactions
Estimate
ed Tip in th
he Authoriz
zation
Recently, both
b
the prep
paid and debitt space has seen
s
exponen
ntial volume g
growth, leadin
ng to an incre
eased
number of prepaid and debit transacttions being prrocessed. Ass consumers gravitate tow
wards using prrepaid
veryday purch
hases, they are more like
ently review transaction d
details
and debit cards for ev
ely to freque
heir prepaid balances or checking
c
acc
counts. This is important to understan
nd as a mercchant,
affecting th
because customer
c
diss
satisfaction can
c
arise wh
hen an autho
orization requ
uest includess an estimate
ed tip
amount.
As a best practice, we suggest merc
chants authorize all Disco
over transactions for only the “known” check
amount, an
nd not the am
mount plus es
stimated tip. This
T
will help you avoid cu
ustomer serviice issues an
nd any
negative re
esponse to yo
our business.
Example:
Restaurant check is $100
c
Customer leaves tip in l
cash ‐ total transaction amount is $100
Customer sees $120 h
hold against account
Customer confusion ‐
thinks restaurant has over charged
R
ds Merchants
s:
Discover Recommend



En
nsure your terrminal, system
ms, software, and back-offiice processess are set up to
o authorize w
without
an estimated tip
p amount.
ain staff to au
uthorize only for
f the check amount. Emp
phasize that tthe authorizattion amount sshould
Tra
equal the check
k amount and exclude any tip percentag
ge.
 Once a prepaid card transaction
n has been a
approved, please note tha
at the authorizzation
code is typically the balance rema
aining on the card. (For exxample, 0001
136 means th
here is
b
remaining. The au
uthorization ccode 000001 indicates a zzero card bala
ance.)
$1.36 balance
This is helpful for your customer to
t know if theyy would like tto leave a tip on the card.
ork with your point-of-salle (POS) pro
ovider to enssure your au
uthorization ssystem is pro
operly
Wo
pro
ogrammed to authorize only for the check amount be
efore the tip iss added.
Merchant Benefits:

Re
educed cardholder comp
plaints – Con
nsumers have
e the ability tto view accou
unt activity in
n realtim
me online, mobile
m
or at an ATM. An authorizatiion including
g an estimatted tip reducces a
cardholder’s av
vailable funds and can lead
d to consume
er confusion. If a customer leaves a ca
ash tip
ded in the autthorization, th
he customer could contact your
or tip that differrs from what you’ve includ
a
why there’s an overrcharge, or wo
orse yet, the ccustomer stops coming in..
establishment asking

spute protection – An authorization
n obtained b
by a mercha
ant operating
g in the MC
CC for
Dis
res
staurants, drinking
d
plac
ces, fast food
f
restaurrants, beauty/barber sh
hops, spas and
tax
xicabs/limousines is valid for that amo
ount plus 20 percent, so chargeback liability is red
duced
wh
hen a tip is not included
d in an autho
orization req uest. Protection from cchargebacks exists
pro
ovided all oth
her authorizattion requirements are mett, for example
e, valid autho
orization, sign
nature
req
quirements.
© 2013 DF
FS Services LLC..
Partial Authorizatio
A
on A sale doe
es not have to
o be declined
d when the ba
alance on a ccustomer’s prrepaid or deb
bit card is lesss than
the amount of purchase
e.
Partial Authorization cre
eates the abillity to comple
ete transaction
ns using the available funds on a prepaid or
debit card, plus an additional form off payment suc
ch as cash orr other payme
ent cards. Forr merchants, this is
referred to as a “split ten
nder” transac
ction.
Merchant Benefits:





creased sales
s
Inc
Re
educed average decline rattes
Inc
creased throu
ughput at POS
S processing
Re
eduction in co
onsumer confu
usion from de
eclines
Au
utomatic reverrsals can be initiated if the sale is not co
ompleted with
h other payme
ent forms
Consumerr Benefits:



Ab
bility to comple
ete a purchas
se for a dollarr amount in exxcess of theirr prepaid fund
ds available
Av
void the emba
arrassment off being decline
ed at POS if tthey are unsu
ure of their rem
maining balan
nce
Fu
ully utilize all funds on theirr prepaid card
d
How it Wo
orks:
Custome
er’s prepaid ca
ard balance
e is less than th
he purch
hase amount.
Merch
hant submits aan authorizzation requestt for the full purchase amo
ount with a Partial w
Authorization indicattor.
Issueer sends a parttial approvaal back to merchant due to insufficient fu
unds.
Sale is ccompleted and
d a receipt prints showing the ender amountss.
split te
Customer pays thee remaiining amount o
of purchaase with anoth
her payment form.
Unique response cod
de is identtified by POS aand sub
btracts partiallly appro
oved amount from total trransaction amo
ount. © 2013 DF
FS Services LLC..