In payment processing, we often refer to all transactions made with any form of card as simply “card payments.” This generalization—while technically correct—may obscure valuable insights which can help merchants understand costs and details about who their customers are and why they use particular card products to complete transactions. At this point in time, most merchants—if they do anything at all—only go so far as to break down transaction data by card type (e.g. credit, debit, prepaid), and don’t consider the variety of card products. We aren’t saying you shouldn’t consider card type, of course, but there are times that knowing more about the attributes of card payments can add another layer when managing costs and driving processing efficiencies.
In this blog post, we’ll explore the impact of card products on payment processing and the importance of taking them into consideration when breaking down transaction data. If you’re then ready to act on this newfound knowledge with your own payments data, we’ve got a bird for that: Parrot by Pagos.
Side Note: While this blog post focuses on card payments specifically, the Pagos platform is actually agnostic to payment methods and our customers are tracking and monitoring payments insights across a wide variety of other payment methods.
With over 190 card products between Visa and Mastercard alone, it’s clear that there is more to differentiate between different payment cards than just card brand and type. As a merchant, you’re required to honor all cards, regardless of product, meaning you might find yourself processing dozens of different card products on a regular basis. It’s important to understand that which card product a customer uses impacts both your ability to successfully process the associated transaction and any costs you might face in doing so. Here are a few examples of the processing differences between different card products:
Interchange is not based on card issuer or card type. Instead, it’s based on card product, merchant category code (MCC), and appropriate authentication, authorization, and clearing messaging. If you want to accurately identify your best case scenarios for interchange, you need card product data.
Not all card products will be supported by 3D Secure (3DS). When you accept transactions from card products without 3DS support, you might face additional processing challenges.
For example, 3DS doesn’t support prepaid non-reloadable card products. As such, these card products won’t perform well as stored cards and they aren’t supported by network tokenization. Furthermore, they can pose challenges when a customer needs a refund to a card after the funds have been exhausted, resulting in the need to refund to a different card.
Business-to-business (B2B) cards allow companies to categorize purchase activity by replacing the consumer-initiated payment with a card product behind the scenes. Most B2B cards are debit cards, and almost all include some form of processing limitations based on options supported by the card product type.
When a customer uses many Buy Now Pay Later (BNPL) options, for example, the card the relevant merchant receives for payment is actually an acquirer-issued single use card. When you accept these types of transactions, the card you process is then not the customer’s card, but a different (B2B) card product entirely. These cards won’t have 3DS, and in many cases, the address verification service (AVS) won’t represent the consumer’s address. How you handle these cards matters; for example, they should not be stored or used for recurring billing.
Another form of B2B card is the virtual card (or ghost card). Businesses use these cards to manage expenses by allowing different individuals or departments to transact with their own unique, single-use tokens linked to the main payment card. When you process a transaction made with one of these tokens, you likely log it as a different card number or method of payment; you may then show the card number you processed on receipts or use the last four numbers to identify sales when your customer contacts you, but your customer likely won’t recognize these numbers. It’s important to be aware of these card types, as this can cause confusion or unnecessary concerns about an error in processing, and refunding transactions to these cards can be difficult.
It’s important that merchants understand that not all card products have the same chargeback rules or dispute processes. In the case of the BNPL transaction, chargebacks are filed by the BNPL provider—not the cardholder— so your customer may not even be aware a dispute was filed. Special handling of these disputes is recommended because it represents an indirect reconciliation issue.
Any fraud-predictive model you build likely uses your own historical authentication and authorization data to help detect risk. Machine learning and AI rely on response codes in combination with other payment data—including payment card attributes like card product—to identify transactions that can be trusted versus those that are suspicious. The success of fraud models therefore hinges on having quality data around the different card products used in the transactions you’ve processed, and the more granular you can get, the more powerful your analysis will be. Treating all cards as credit, debit, or prepaid without considering the product type excludes the over 190 variables where the brand includes Visa or Mastercard.
Before you launch your next marketing campaign, wouldn’t it be helpful to know if your actions will change customer behavior, increasing sales on the least expensive card product? If you just use card type to estimate the expense of a marketing campaign, you might miss the mark! When you take the time to dig into which card products your campaign will apply to or where you are moving traffic from, you can better anticipate the greater impact of your campaign.
Measuring and monitoring by card type and issuer is still valuable, but there are times you need to know more and times when knowing the card product will help you manage your customer relationships and your bottom line with more accuracy. The more you know about which card product a customer pays with, who issued it, and what its product rules are, the more you can learn about your customer.
At Pagos, we are all about helping merchants gain insights to solve complex problems. With Parrot Batch, our file-based product for retrieving bulk BIN data on the cards your customers transact with, you can make as many calls to get BIN data as you want, and use it where and how it makes the most sense for your business. Parrot Batch makes breaking down your transaction data by card product easier than ever.
Contact us today for more information on how you can find out what card products your transactions are processed against, and how using this data can help you with customer service, risk, marketing, and minimizing your payment processing expenses.