Understanding processing costs

What is interchange?

Interchange is the fee paid to card-issuing banks (the financial institution that issues a credit or debit card) for every card payment transaction to compensate for costs and risk associated in advancing the payment. Interchange is established by card payment networks (Visa^®, Mastercard^®, Discover^®, American Express^®). Different factors — including the way the transaction was processed, the card type used, and industry type — can determine the amount of interchange.

Merchant acquirers, such as Wells Fargo, determine how to pass interchange along to merchants. This is included in your processing cost.

What is a downgrade?

A card sales transaction that does not meet all requirements for the lowest rate and will process at interchange levels that carry higher costs. Rates can vary according to the card type, merchant industry type, and the way a transaction was processed. If one or more of the card payment networks’ requirements are not met, the transaction will be categorized at a higher interchange rate.

To limit interchange costs, reference the following best practices while processing payments:

Have customers insert or tap cards whenever possible – Instead of using a keypad to manually enter card information or swiping a card, have customers insert or tap cards whenever possible to avoid a higher risk of error or fraud when a card’s physical security precautions have been bypassed.

Settle your transactions daily – When payments are made face-to-face, settlements must be sent within one day to qualify for the most favorable rates. Even if your equipment can hold several days of transactions, not batching each day may lead to higher interchange cost and a delay in your funding.

Capture additional security information when accepting card payments – Many merchants can qualify for lower rates (especially in card-not-present environments) by collecting more data with each card transaction, such as billing address and zip code, using Address Verification Service (AVS).

Include your business phone number and unique order number on customer statements – Help cardholders easily identify their transactions with your business and minimize disputes by ensuring these point-of-sale (POS) details are included on statements configured by Wells Fargo.

Process card-present and card-not-present sales through the same POS system to allow the system to pass the required data elements for each processing method. You can work with Wells Fargo to ensure these capabilities are available for your equipment.

Managing fraud, losses, and disputes

What is a dispute?

Disputes occur when a transaction is challenged by the cardholder or a card issuer. Common reasons for disputes include that the card was fraudulent, the cardholder disputes the quality or receipt of merchandise, the amount charged to the card was incorrect, processing errors were made during the transaction, or proper authorization was not obtained.

Signs that an online transaction could be fraudulent

• Larger-than-normal orders, multiple purchases on the same day, or orders that include several of the same items (particularly if the item has a high resale value).
• Orders shipped to a single address but made on multiple cards, or multiple transactions on one card or similar cards with a single billing address but multiple shipping addresses.
• Billing address provided by customer to the merchant does not match with Address Verification Service (AVS).

Signs that a card-present payment could be fraudulent

• Card shows signs of tampering or is unsigned.
• Transaction is occurring either prior to the valid date or after the expiration date on the card.
• Account number on the card and the number displayed on the terminal do not match, even if an authorization is received.

What if I think a transaction is suspicious?

• Call the Authorization Center at 1-800-626-4480 and ask for the Code 10 Operator, which indicates that you suspect a fraudulent transaction.

How can I help prevent fraud and disputes?

• Make sure the business name provided to us matches or is similar to what will appear on the cardholder’s statement, so they recognize the charge.
• Respond promptly to retrieval requests and dispute notifications.
• Ensure sales drafts are safely stored and accessible to authorized employees for 180 days after the initial transaction date.
• Take authorization for the full transaction amount from the card network; don’t break it into smaller chunks before processing a payment transaction.
• Use Address Verification Service (AVS) and Customer Identity Verification (CIV) such as 3- or 4-digit CVV or CVC.
• Take advantage of fraud protection programs.

Online dispute management tools

• Dispute Management is an application available within Commerce Control Center that allows you to review, manage, and respond to payment disputes and chargebacks online.
• Dispute Management Light is a version of this application available that supports basic dispute management features within Clover Dashboard for Clover device users.

Data security and industry compliance

Card payment networks exist for the purpose of facilitating payment transactions. To help manage fraud and risk more effectively, these networks have implemented comprehensive security requirements defining how cardholder data must be stored, managed, and processed to help keep it secure. All merchants must be compliant with the PCI Data Security Standard even if they are not required to validate that compliance.

Payment Card Industry (PCI) Data Security Standard >

Applies to all credit card and debit card transactions for Visa, Mastercard, Discover, American Express, and JCB transactions. These security standards are internationally recognized best practices for cardholder data security and are intended to confirm that cardholder data is appropriately protected at all points during a transaction. The PCI Data Security Standard protects cardholders while minimizing the risk to your business.

Learn more about the following security programs and policies:

Mastercard^® Site Data Protection (SDP) >

Visa^® Cardholder Information Security Program (CISP) >

Discover^® Information Security and Compliance (DISC) >

American Express Data Security Operating Policy (DSOP) >

Reviewing your statement

Wells Fargo provides a monthly statement of your transaction activity in a format designed to facilitate account reconciliation. Please refer to this breakdown of a sample statement.

Definitions:

• Total Amount Submitted – The total dollar amount of card transactions submitted and processed during the Statement Period.
• Chargebacks/Reversals – Transactions that are challenged or disputed by a cardholder or card issuer. A Chargeback equals the transaction amount that is disputed by the cardholder or card issuer. A Reversal is the amount that was initially charged back to the merchant but has subsequently been resolved in favor of the merchant.
• Adjustments – The amounts added to or deducted from your account to resolve processing and billing discrepancies.
• Fees – Transaction-based, volume-based, and/or fixed amounts charged for specific card processing services.
• Merchant Number – The unique account number assigned to every merchant and merchant location. You can find it at the top of your statement.

FAQs

What if my device is missing in the mail or arrived damaged?

If anything is missing or broken, please call us at 1-800-451-5817. We’re available 24/7.

Where can I receive support?

View the Merchant Services support section below for support.

Where can I find my Merchant ID?

Your Merchant ID (MID), sometimes referred to as “Merchant Number” can be found in several places, including:

• The welcome email you received from Wells Fargo
• Your monthly statement(s)
• Clover dashboard or on your device (for Clover customers)
• Commerce Control Center

How do I translate authorization codes?

An authorization is an approval for a sale amount on a card account. All card sales require an authorization from the card issuer to verify that the card is valid and has sufficient funds or credit line to cover the amount of the transaction. The card issuer provides an authorization and approval code to Wells Fargo. Please reference the authorization code table for support.

Want more information on payment processing?

View the Guide to Processing Payments.