Don’t Card the Cardholder!

Does your business require customers to present photo ID in order to pay by credit card? Do you make your employees write down your customer’s TRN before they fill up or check out? If you’ve answered yes to either of these questions, you’re probably not going to like this article.

Credit card companies place great emphasis on accessibility and convenience. They invest heavily in fraud detection and prevention so that their customers don’t need to sacrifice convenience for safety, wherever they are. VISA’s slogan has never been “everywhere you and your ID want to be”. But that is exactly the message that is conveyed whenever merchants are allowed to ignore the rules set by credit card companies. No matter how well-intended these measures might be, merchants who ignore the rules do so at their own risk.

According to MasterCard’s Worldwide Rules (updated 1st August 2012), “A merchant must not refuse to complete a MasterCard card transaction solely because a cardholder who has complied with conditions for the presentment of a card at the POI [Point of Interaction] refuses to provide additional identification information, except as specifically permitted or required by the Standards.” As far as I could tell, there is no special Standard that applies to Jamaican stores and gas stations. MasterCard will not prevent a merchant from asking for identification, but it makes it explicit that the provision of identification cannot be a condition for acceptance of the card, save for specific cases, such as where the merchant requires verification of the customer’s address for shipping purposes.

VISA has a similar stance. The following is taken from their Card Acceptance Guidelines for Merchants. “When should you ask a cardholder for an official government ID? Although Visa rules do not preclude merchants from asking for cardholder ID except in the specific circumstances discussed in this guide, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot as part of their regular card acceptance procedures refuse to complete a purchase transaction because a cardholder refuses to provide ID. It is important that merchants understand that the requesting of a cardholder ID does not change the merchant’s liability for chargebacks. However, it can slow down a sale and annoy the customer. In some cases, it may even deter the use of the Visa card and result in the loss of a potential sale. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures. Laws in several countries also make it illegal for merchants to write a cardholder’s personal information, such as an address or phone number, on a sales receipt.”

Why, then, do some merchants insist on breaking the rules? Some of them allege that their bankers require them to check ID. Those merchants must not be banking with NCB. To its credit, NCB has consistently tried to discourage the practice of ‘carding’ the cardholder. Some merchants believe that writing down the customer’s ID number will limit their risk to chargebacks, which is the reversal of the payment. VISA disagrees. Then there is the argument that it can’t hurt to check ID, even if the customer complains. Big mistake.

This article is for general information purposes only and does not constitute legal advice.

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