CARIBBEAN CREDIT CARD CORPORATION LTD. Card Present & Card Absent Best Practices Facilitator: Kristy A Stanley Fraud and Compliance Officer June 16 2011

Legal Disclosure These materials are provided for informational purposes only and should not be relied upon for marketing, legal, regulatory or other advice. You should independently evaluate all content and recommendations in light of your specific business needs, operations and policies as well as any applicable laws and regulations. Caribbean Credit Card Corporation Ltd. is not responsible for your use of these materials, including errors of any kind, or any assumptions or conclusions you might draw from their use. Use of the following information is the sole and exclusive responsibility of the user.

Card Present Environment Best Practices

Card Present and Card not Present Best Practices The issue of credit/debit card fraud presents the single most important challenge to our business Risk Factors Opening up of the region to international travel Growth of the credit/debit card business will attract persons who know our vulnerabilities Increasing travel by cardholders

Common Standards Place Decals on the door, window & cash registers of your business Accept all Qualified cards These cards may look different but they all Have the same basic card elements and security features, and Guarantee payment to you when acceptance procedures are correctly followed.

Common Standards No surcharging Process reversals not refunds Deposit transactions for your business only Deposit transaction receipts within 5 calendar days of the transaction.

Common Standards Do not set minimum and maximums Include taxes in the sales draft If you are required to collect local taxes, these should be included in the total transaction, as it appears on the sales draft Do not offer cash refunds for transactions Returned goods or cancelled services Offering refund vouchers for refund and adjustments protects you from loss through fraud A Fraudster, using a stolen or counterfeit card, could purchase goods and return them for cash

Authorization Request authorization for ALL purchases and cash advance transactions ( bank only). When the card won’t swipe Usually means one of three things: The terminal’s magnetic-stripe reader is not working properly, The card is not being swiped through the reader correctly, or The magnetic stripe on the card has been damaged or demagnetized.

Authorization Merchants should take the following steps: Check the terminal to make sure it is working and that you are swiping the card correctly. If the terminal is okay, check the card’s security features to make sure it is not counterfeit If the problem appears to be the magnetic stripe, follow merchant procedures, which may include: Key-enter transaction data for authorization or Call voice-authorization center For key-entered or voice-authorization transactions, make an imprint of the front of the card. The imprint can be on the terminal sales receipt or a separate manual sales receipt. Either way, it should be signed by the customer.

Transaction Adjustments Split Sales (Cash, Check, two cards) If more than one card, each with a different account number, is being used, you must use a different sales draft for each card. If payment was made with card and cash or check, keep separate receipts indicating such together Exchange of goods of greater value Prepare a sales draft & seek authorization for the difference in cost Exchange of goods of lesser value Prepare a refund voucher for the difference in cost

DO NOT ACCEPT THE CARD If the card is invalid If you suspect that the card may be altered or counterfeit If the number shown on your magnetic card reader or printed by the electronic point-of-sale terminal does not match the number on the card

Staff Training Merchant staff must be trained on the proper card acceptance procedures including how to recognize Visa & MasterCard security features Keep your staff up to date with training material provided by your bank. Training improves customer service Training reduces losses and risks Your employees should also know what to do if they have any reason to be suspicious

Card Absent Environment Best Practices

Merchant Procedures Follow card acceptance procedure for card not present transactions. For recurring transactions: Use the “Doing Business As Name” in all correspondence with the cardholder. Inform / provide cardholder of third party payment process agent name Billing amount on the card statement should match the amount agreed with the Merchant Shipping charges added Ensure goods or services are delivered in the timeframe agreed

Merchant Procedures Provide a Customer Service contact phone number or email Clearly state merchant termination/cancellation policies in Cardholder agreement Marketing material, website Clearly inform cardholder upfront of the billing arrangements and all charges Act promptly to Cardholder instruction to cancel a recurring payment

Merchant Category Codes (MCC)

Merchant Category Codes Hotel and Lodging Automobile Dealers

Hotels Reservations Ask for Inform Cardholder of Cardholder’s name, account number & expiration date Optional - Manual Authorization / Advance Deposit No show Fraud Prevention Inform Cardholder of rate, including taxes, Advance deposit exact name and address of hotel reservation confirmation code

Hotels Reservations Explain to Cardholder The cancellation policy, Reservation is guaranteed until check-out time on the day following the scheduled arrival date Hotel “No show” policy & rate (one night’s lodging, including taxes) Contact the bank to obtain issuer information (telephone number) in order to complete name and address verification prior to processing the authorization.

Hotels Check In Check Out Confirm length of stay Verify name of Guest with Name on Card* Request manual authorization for total accommodation during the first night If an advance deposit was processed, this amount should be deducted from the total transaction amount Check Out You do not need to request a new authorization if the final transaction is less than the sum of all authorized amounts, plus 15% Cardholder signs total invoice Eg: A cardholder who emailed a merchant stating that friends / family members were giving her a trip for her birthday. She of course submitted different card numbers for the merchant to charge. All were charged back claiming fraud. If friends were giving her the trip they could have made the booking themselves or better still put the money to her account so she could make her own bookings.

Hotels Handling No-Show Handling Over-Booking Transaction receipt should include the words “No-Show” on the signature line of the transaction receipt Handling Over-Booking If guaranteed accommodation is not available when the Cardholder arrives, you must provide the Cardholder with the following services at no charge Comparable accommodations for one night at a Hotel at least of the same quality Transportation to the alternative Hotel Forwarding messages and telephone calls received to the alternate Hotel If requested, a 3 minute telephone call

Car Rental Agencies Verify name of Customer with name on Card Request authorization before the Cardholder departs with the vehicle Valid for the entire rental period DO NOT include potential damages or loss of the rental vehicle. (Process transaction separately and obtain a signature.)

Car Rental Agencies When should you request a new authorization If cardholder extends rental period and the revise amount exceeds the original authorization by 15% If legitimate additional charges exceeds the original authorization by 15% Fuel Used, Additional rental fees, Insurance, Damages, Parking tickets/ other traffic fines Ensure that Agreement covers all additional charges / insurance policy and is signed by the cardholder

EXAMPLE The actual transaction is $500.00. As shown below, this is more than the previously authorized amount plus 15%. Previously authorized amount $350.00 15% added 53.00 Total $403.00 In this situation, an additional authorization is necessary. $500.00 – $350.00 = $150.00 ACTUAL PREVIOUSLY YOU MUST OBTAIN TRANSACTION AUTHORIZED ADDITIONAL AUTHORIZATION AMOUNT FOR THIS AMOUNT* *The total sum of the additional authorization amount plus the previously authorized amount must equal the actual (or final) transaction amount.

Conclusion Payment card fraud may never be eliminated however through: Adherence to the industry best practices Continuing merchant awareness Payment card fraud losses may be minimized.

Questions and Comments

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