How We Use Our Credit Cards Merchant or customer fraud is the root cause of most chargebacks. It can take many forms, some of which may be more sophisticated than others.
The use of counterfeit cards is one of these more sophisticated types How We Use Our Credit Cards:
of fraud and can be very damaging, especially when the card is used at unattended cash registers where there is no one to examine the card’s security features.
Visa uses Reason Code 62 to indicate chargebacks, which can often be traced to counterfeit cards. Reason Code 62 is initiated when an issuer receives a claim from a cardholder that they did not authorize or participate in the disputed transaction.
In this article, I’ll look at the reasons, conditions, limitations, and processing requirements that apply to Reason Code 62, and offer strategies to prevent this type of chargeback, as well as steps you can take to address it.
What causes Reason Code 62
A reason code 62 is typically initiated when a counterfeit card has been used in a face-to-face transaction that has received authorization approval and the merchant:
Failed to match the first four digits of the embossed account number on the front of the card with the printed digits below the embossed number.
You have received authorization approval without submitting all the required information.
She accepted an EMV (chip) card but processed the payment as a backup transaction, i.e. swipe, key entry or paper voucher, and did not follow applicable acceptance procedures How We Use Our Credit Cards.
Reason Code 62 Rights, restrictions and processing requirements
All of the following conditions apply to this reason code:
Billing is void if the issuer did not participate in the Card Verification Value program at the time of the transaction.
The issuer is obliged to close the cardholder’s account in question.
A chargeback is invalid if the authorization contains a POS entry mode code.
The account number must be listed on the Exception File with a “pick up” response for at least 30 calendar days.
The transaction should be reported to Visa as fraud How We Use Our Credit Cards .
The deadline for Reason Code 62 is 120 calendar days from the date of the transaction.
Reason Code 62 Resubmission Conditions
A Reason Code 62 chargeback may be resubmitted under one of the following circumstances:
A credit or cancellation has been processed.
Chargeback is invalid.
The authorization record contains the POS entry mode code.
Reason Code 62 must be processed within 45 calendar days of the chargeback settlement date How We Use Our Credit Cards.
How to respond to reason code 62
Your actions in response to a Reason Code 62 chargeback will be determined by the specific circumstances as follows:
The card has been charged and the transaction has been authorized. Provide your processor with a copy of the printed sales receipt.
The transaction was fraudulent. Accept the chargeback but don’t process the credit because the chargeback has already done that for you How We Use Our Credit Cards.
How to prevent Reason Code 62
As I mentioned before, preventing this type of chargeback is almost impossible in unmanned locations. Elsewhere you should:
Check the security features of the card. In particular, you should:
Verify that the first four digits of the embossed account number on the front of the card match the printed four-digit number on the bottom of the card. A mismatch is a strong sign of a counterfeit card and you should call with code 10.
Verify that the 16-digit account number on the front of the card is the same as the number that appears on the point-of-sale (POS) terminal when the card is presented.
Be on the lookout for any other signs that may indicate the card has been tampered with, such as embossed numbers that are blurred or uneven, or any other signs of possible tampering.
Call code 10. If for any reason you suspect the card or your customer, call your processor’s voice authorization center with code 10 and follow the instructions How We Use Our Credit Cards.
Preventing a Reason Code 62 chargeback is not easy. However, what is particularly difficult is that most merchants do not even look at the cards used by their customers, making it impossible to identify counterfeits.
If you want to have any chance against criminals using counterfeit cards in your store, you’ll first need to commit to checking all cards presented for payment. Then educate yourself and your staff on how to spot fakes and how to call code 10 when you suspect fraud. We’ve developed lots of resources to help you do this and made them freely available to everyone, so inactivity is no excuse.
Getting a credit card has its advantages. Credit cards are good for purchases and some even offer rewards for what you spend. What’s more, a credit card can be a useful tool for building a positive credit history. If you’re looking for your first credit card, it’s important to understand how they work and how to use them to your advantage.
Credit cards can be a useful way to build or restore your credit history.
Unlike debit cards, which are linked to a bank account, credit cards are basically a way to borrow money short-term and pay it back later How We Use Our Credit Cards.
Understanding how grace periods and interest charges work is important to managing the cost of using credit.
Your credit score can be affected—for better or worse—by how you use your credit card.
How credit cards work
A credit card allows you to make purchases and pay for them later. In that sense, it’s like a short-term loan.
When you use a credit card to make a purchase, you’re essentially using the credit card company’s money. You then pay that money back to the credit card company, with or without interest, depending on the timing of your payment How We Use Our Credit Cards.
Your credit card provider gives you a credit limit to make purchases. This limit will be based on things like your credit score, income and account history. As you charge purchases to the card, your available credit decreases. Making payments against the balance frees up available credit again. Your credit card company sends you a statement each month detailing all your activity, balance, minimum payment and due date.
Reading your credit card statement
You will receive a statement of your account activity every month. This statement includes:
The total balance on your card
Your available credit limit
Purchases you made during this billing cycle
Minimum payment due
Payment due date
The minimum payment due is the least amount you have to pay in a given month. But it’s always a good idea to pay more than the minimum if you can How We Use Our Credit Cards.
Your card statement will also tell you how much it will cost you to pay off the balance over time with interest. You can avoid interest charges on credit card balances by paying your bill in full during the grace period. A credit card grace period is a set period of time, usually 20 to 30 days, where you must pay off recent purchases before interest starts accruing.
If you don’t pay the full amount, interest will start to accrue. The amount of interest you pay is determined by your card’s annual percentage rate (APR). The APR reflects the interest rate for the card along with the fees the card charges as a percentage per year How We Use Our Credit Cards.
Credit cards can have more than one APR. For example, your card may have one APR for purchases, another for balance transfers and another for cash advances. Some cards also offer promotional APRs that apply to purchases and/or balance transfers for a limited time after opening a card account.
How to use a credit card
Credit cards are easy to use. For example, if you go to a store, you may be asked to insert your card into a chip reader or swipe it at the checkout. You can also add the card to digital wallet apps for contactless payments in stores. When shopping online, using your credit card is a matter of entering your card information, including:
Your card number
Your card’s CVV security code, which is usually printed on the back
When you use your card to make a purchase, the merchant, credit card company, and card network (such as Visa or Mastercard) coordinate the authorization and processing of the payment. All this takes place electronically and practically instantly How We Use Our Credit Cards.
It’s also important to use your credit card in ways that help boost your credit score without costing you more than necessary in terms of interest and fees. For example:
1. Pay your bill on time
A credit score is based on a variety of factors, but the most important is your payment history.
Paying your bills on time can help your credit score, while late or missed payments can seriously hurt it. So the first tip for using a credit card is to make sure you make your payments on or before the due date each month.
You can schedule automatic payments from your bank account or set up due date reminders through your credit card account to minimize the risk of late payments How We Use Our Credit Cards.
2. Find out how your card interest is calculated
Interest charges can make everything you buy with the card more expensive if you carry a balance from month to month. When you open a credit card account, make sure you understand what APR is and how interest is charged on purchases.
Remember that you can pay off purchases interest-free during the grace period. Also be aware that if you have balances with different interest rates, your payments may be applied differently. For example, say you have one balance on a promotional 0% APR and another balance on a regular APR purchase. Anything you pay over the minimum amount will be applied to the balance with the highest APR first How We Use Our Credit Cards.
Cards with promotional offers may charge 0% interest on purchases and/or balance transfers, but those rates don’t last forever. Any remaining balance you owe after the promotional period ends will be subject to the card’s normal APR.
3. Watch out for credit card fees
Credit cards can charge numerous fees that also increase the cost of using them. Some of the more common fees you may encounter are:
Foreign Transaction Fees
Balance transfer fees
Late payment fees
Refunded payment fees
All of these fees, as well as the card’s APR, should be listed in the card agreement. You can also find them online before applying. If you’re considering a card with an annual fee, weigh that against any value the card may offer through a rewards program or other benefits. Many cards are available with no annual fees.
Similarly, if you plan to spend time abroad, you can opt for a card that does not charge foreign transaction fees How We Use Our Credit Cards.
4. Watch your balance
After your payment history, the second most important factor that affects your credit score is your credit utilization ratio.
It measures how much of your available credit you are using at any given time. It’s generally better to keep your card balance low relative to your credit limit. Running out of credit cards can cause your credit score to drop and also send a signal to lenders that you may be a higher risk borrower How We Use Our Credit Cards.
A common credit card myth is that carrying a balance will improve your credit score. Conversely, carrying a balance can potentially hurt your score if it means you’re using more of your available credit.
You can help your score—and save money at the same time—by not charging more each month than you can afford to pay in full.
Credit cards (even secured credit cards) can help you get credit, but they can also work against you if you use them incl.
When you need to make a purchase or pay a bill, credit cards can offer convenience as well as the potential to save money if you earn back some of what you spend in rewards. At the same time, you can also use credit cards to build your credit history through healthy financial habits.
While credit and debit cards may look similar, they work very differently. If you’re new to credit, here are some important credit card facts you should know How We Use Our Credit Cards.
Credit cards have a credit limit that you can make purchases with and then pay off later.
Credit card balance transfers may incur interest charges.
It is important to read the fine print on credit card promotional offers carefully.
Some credit cards allow you to earn rewards on purchases in the form of points, miles or cash back.
What is a credit card?
A credit card is a physical card that can be used to make purchases, pay bills or, depending on the card, withdraw cash. The easiest way to think of a credit card is as a type of short-term loan How We Use Our Credit Cards.
When you open a credit card account, the company that issued your credit card gives you a set credit limit. This is basically the amount of money your credit card company allows you to use to make purchases or pay bills. Your available credit decreases as you charge things to your card. You then pay back what you spent from your credit limit to the credit card company How We Use Our Credit Cards.
Credit cards can be secured or unsecured. A secured credit card requires a cash deposit to open, which usually doubles as your credit limit How We Use Our Credit Cards.
How credit cards work
Credit cards can be used to make purchases online or in stores and to pay bills. When you use a credit card for any of these, your card details are sent to the merchant’s bank. The bank then obtains authorization from the credit card network to process the transaction. Your card issuer must then verify your details and either approve or decline the transaction How We Use Our Credit Cards.
If the transaction is approved, payment is made to the merchant and the available credit on your card is reduced by the amount of the transaction. At the end of your billing cycle, your card issuer will send you a statement containing all transactions for the month, your previous balance and new balance, the minimum payment due and the due date.
The grace period is the period of time between the purchase date on your card and the due date shown on your statement. If you pay your bill in full by the due date during this period, no interest will accrue.
But if you carry a balance month after month, your card issuer may charge you interest. Your credit card’s annual percentage rate (APR) reflects the cost of carrying a balance on an annual basis. Your APR includes both your interest rate and other costs, such as an annual fee if your card has one How We Use Our Credit Cards.
Most credit cards have a variable APR that is tied to the base rate. This means your card’s APR can change over time, although the Credit Card Accountability, Accountability and Disclosure (CARD) Act of 2009 sets out strict rules for when credit card companies can and cannot raise your rate How We Use Our Credit Cards How We Use Our Credit Cards.
Being 60 days late on your credit card payment can result in an APR penalty that can approach 30%.
Types of credit cards
There are several types of credit cards, with rewards cards being the largest category. Rewards credit cards can include travel-related rewards earned on purchases. You can also earn more rewards for spending in certain categories. Many loyalty cards are co-branded with certain airlines or hotels How We Use Our Credit Cards.
Similar to rewards cards are cash-back cards that offer a certain level of cash back (such as 2% or 5%) on spending. Secured credit cards are for those who want to build or rebuild their credit. If your credit profile is poor, you can get a secured card that requires a security deposit held by the issuer as collateral.
Student credit cards also help people with poor credit history build credit. These cards are geared toward college students and may offer little in the way of rewards How We Use Our Credit Cards How We Use Our Credit Cards.
Credit card fees
There are various fees that come with credit cards – not just the interest rate. Additional fees may include balance transfer fees or fees charged for transferring your balance to another card. These fees are usually a percentage of the transferred balance, such as 2%.
There may also be over-limit fees that are charged if you exceed your card’s limit. Of course, there are late fees that are charged if you don’t make the minimum payment by the due date. Note that if you are late with your payment, the publisher may also cancel any introductory rate you had.
Credit Cards Vs. debit cards
A credit card and a debit card may look like the same thing, but they are not. When you make a purchase with a credit card, you’re not actually spending any of your own money at the time. Instead, you spend money to the credit card company, which you then have to pay back, possibly with interest How We Use Our Credit Cards.
Debit cards, on the other hand, are linked to your checking account (not quite the same as a prepaid card). When you make a purchase with a debit card, the money is automatically deducted from your bank account as soon as the transaction is processed. There is nothing to repay later because the money has already been deducted from your account How We Use Our Credit Cards.
Many credit card issuers offer a $0 fraud liability guarantee automatically, which means you are not responsible for any fraudulent charges made to your card.
Debit and credit cards also differ in their impact on credit scores. Using a debit card has no effect on your credit score because your bank account activity is not reported to the credit bureaus How We Use Our Credit Cards.
On the other hand, credit cards can directly affect your credit score. For example, the FICO score calculates your score based on How We Use Our Credit Cards:
Use of credit
Age of the loan
Questions about a new loan
Making credit card payments on time can help your score, while making late payments could hurt it. Similarly, keeping a low balance compared to your credit limit can have a positive impact, while maxing out your card limits can lower your score.
Another key difference between debit cards and credit cards is fraud protection. Federal law offers more protection against credit card fraud than debit cards. This chart highlights your liability for unauthorized debit and credit card transactions How We Use Our Credit Cards.
Debit Cards Vs. Credit Cards
Debit Card Liability Credit Card Liability
You are not responsible for unauthorized transactions if the card is reported lost or stolen before someone else uses it. If the card is reported lost or stolen within two business days, your liability is limited to $50. If your card is reported lost or stolen more than two business days but less than 60 calendar days after your statement is sent, your liability is limited to $500. If the card is reported lost or stolen more than 60 calendar days later, you are responsible for all unauthorized transactions How We Use Our Credit Cards How We Use Our Credit Cards.
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