Unless a cardholder later disputes a transaction, the card payment process for card present or face-to-face transactions is very simple:
- When customers make a purchase, their card should be inserted or swiped through your terminal - or you key in their card number if you're taking an order by phone or email.
- You key in the transaction amount.
- If the transaction is face to face, in the majority of cases for UK-issued cards, the customer usually has to enter a PIN (personal identification number) to verify the purchase and that they are entering into the transaction. Customers undertaking a contactless transaction simply hold their contactless enabled card up to a secure reader to make their payment.
- The terminal checks to see if the card is valid. In addition, in a majority of cases, the terminal sends details of the transaction via your acquiring bank to your customer's card issuing bank to check if sufficient funds are available to complete the transaction and that the card has not been reported as lost or stolen. Where these checks are pass the transaction is authorised and an authorisation code for the transaction is generated.
- Once a transaction is completed, your bank processes the transaction and credits your account with the customer's money - usually within three to four days. A processing charge is applied by your bank.
However, an authorisation does not guarantee that a transaction is not fraudulent or that it will not be charged back at a later date.
Contactless cards are secured by the same technology that underpins chip & PIN. Although contactless transactions do not usually require a PIN to be entered, occasionally the terminal will ask the cardholder to undertake a full chip & PIN transaction.
If a cardholder queries a charge made on their card and can show they didn't authorise it - perhaps because the card was stolen - you could be told to refund the cardholder's money. This is known as a chargeback. Chargebacks can be made up to 120 days (this timing may differ depending on the type of card used eg MasterCard or Visa) after the transaction has been debited from the cardholder's account.
For more information see your liability for disputed card payments.