A credit card processing primer by John Monarch

BETTER PROGRAMS THROUGH BETTER

BANKING

• Merchant Accounts/MIDs

• Gateways

• Customer Relations Management (CRM) and Shopping Cart Software

• Approvals, Declines, Errors

THE BASICS

• What is a Merchant Account, and what does “MID” mean?

• Who has Merchant Accounts?

• ISO/MSP vs IPSP vs Bank

• Paypal?

• Clickbank, Plimus, Google, etc.

MERCHANT ACCOUNTS

• Why do I need a Gateway? Isn’t a merchant account enough?

• Equivalent of Point of Sale. Passes data.

• Who provides Gateways? Authorize, NMI

• How does a gateway impact my business?

PAYMENT GATEWAYS

• CRM vs Cart – Direct Response and eCommerce

• Why does this matter?

• What to use? Limelight, Magento, OSCommerce, etc.

• This impacts conversions?

CRM/CART SOFTWARE

• Merchant Account decline rate and reasons for this

• Gateway errors

Spaces in CC# not accepted, security violations, invalid Luhn checksum, CVV2 invalid, expired card

• Data handling errors

• CRM errors

HOW EACH IMPACTS CONVERSIONS

• Gateway code definitions

• Some declines may be good.

• BIN verification

• NSF – Not Sufficient Funds (not always bad!)

• Fraud prevention

NOT ALL DECLINES ARE EQUAL

• Bank Identification Number

• Certain BINs should be blocked

• How to know which BINs to block?

• What do BINs mean?

• Sample: 511122, 489212, 448279, 514503 – all GreenDot

WHAT IS A “BIN”?

Prefixes• 0 – ISO/TC 68, Reserved for Future Assignment• 1 – Airline Cards• 2 – Airlines and Future assignments• 3 – Travel and Entertainment, Banking & Financial. AMEX, JCB• 4 – Banking and Financial – VISA reserved• 5 – Banking and Financial – MasterCard, Diners Club, Maestro

Debit• 6 – Merchandising, Banking & Financial – Discover, China Union

Pay• 7 – Petroleum, future assignments. FUELMAN, Exxon, Sunoco• 8 – Healthcare, Telecom• 9 – National Assignment, Governments

BIN MEANINGS/ISO-IEC 7812

• 3715** - American Express Platinum• 356210 – HSBC Hong Kong JCB Credit Card• 401180 – SunTrust Visa Debit Card• 603220 – WalMart Discover Credit Card• 923362 – SwedBank Temporary ATM (30 Day) Card• 3715** - American Express Centurion• 434256 – Wells Fargo Visa Debit Card

• A live example – anyone want to volunteer the first six digits?

EXAMPLES

• Integrating BIN verification to reduce fraud and increase conversions

• Automatic BIN rejection

• Automatic MII selection on checkout to remove an extra menu

• All combined advice can raise conversion rate up to 30%

• BIN Base, BinDB and other services

INTEGRATION

• http://en.wikipedia.org/wiki/Bank_Identification_Number• http://en.wikipedia.org/wiki/

List_of_Bank_Identification_Numbers• *(Note: BIN list on Wikipedia is accurate, but

infrequently updated)• The American Bankers Association (http://www.aba.com/

default.htm)• http://www.binbase.com and http://www.bindb.com• International Standards Association (http://www.iso.org)

REFERENCES