Late Presentment

As the environment where usage of Card-Not-Present for collecting transactions for the product or services is growing rapidly that helps business to make their product or services available on the global level. This is one the benefit companies are enjoying with the integration of internet in the traditional way of doing business.

With the use of internet for selling goods, there are few reasons that can cause the loss in the business. One of them is being late in presenting the transaction details. This can be called as the merchant-end fault that can be avoided. But first we need to understand that why card brand or customer’s bank can deny depositing the transaction amount of a valid transaction.

To understand this, first we need to understand the lifecycle of the transaction that a merchant performs to get the funding of the transaction. While saying online payment collection, we can imagine that while a buyer initiates the purchase, selects the payment option that opens a new window, where buyer performs the operations according to it card and account type. The process that takes place with fraction of seconds on the gateway window decides whether the customer’s account and card is authorized to buy the product or not.

This process of transactions authorization basically involves all the financial services that are related to buyer and merchant via internet connectivity that verifies buyer’s card details and debit the required amount from the account. But, one thing merchant needs to keep in mind while collecting the payments through internet that is the lifecycle of the transaction doesn’t complete by just debiting the amount from the buyer’s account. One thing in this payment cycle that is to be done by merchant’s end is to provide the legitimate transaction proof to the merchant’s bank or card processors to get the money funded into their account. The merchants have to provide the proofs within the time limit as specified by the card brands.

This is where the chances of merchant’s fault occurs as a website collects a large amount of payment, all the payments are categorized into batches that are sent to card brand networks that sends request for validation into individual customer’s bank as proof to get funded. In this process of batching is required timeliness, that should be taken care according to the card brand rules that is, MasterCard have specified 7 to 30-days of time-frame and VISA have specified 10-days after the date of processing of transaction.

The reason behind this timely of timely file of transaction within the time-frame is an effective move as this will help to get the authorization of the cardholder because the transaction will be fresh in the mind of the buyer. This timeliness will also help to avoid the dispute of transaction as the transaction will be cleared before any fault can occur regarding to customer’s account or card.

Even if a merchant faces the chargeback issue due to submitting the processed transaction late. This chargeback reason is named as Late Presentment, by VISA and MasterCard. Both the card networks have designated reason code of Late Presentment that is 74 for VISA and 4842 for MasterCard. These reason codes have few specified conditions that tell why the merchant faced the Chargeback claim for Late Presentment Reason.

But, there is no remedy to dispute this chargeback; a merchant has to accept it, if the merchant doesn’t follow the timeframe of the card brands. The only option is to avoid this error is to take precautions. The precautions are:

• Follow the time-frame guidelines: Merchants should try to deposit the transaction details to the card brands on the same day or very next day, if possible. But, in the case of Card-not-present transactions, merchants can only deposit the receipt only after the product or services are shipped.
• Automation of transaction data batching: This can be most preferable option an e-Commerce merchant should follow. A merchant should use the systems/software that automatically generates the list of daily transaction details, which will help merchants to save time and keep themselves updated.

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