Credit Card News Weblog

What is the risk faced by the acquirer bank in case of default by the customer?

2007-08-03T15:20:00.000-07:00

Does he get his cut even if the customer defaults or does he even bear the risk?

This is one of the primary advantages to the merchant. The merchant does not have to worry about payment. The credit card issuer guarantees the payment (provided the merchant adheres to the rules; get authorization, signature, card present, etc...) The credit card issuer bears the risk of default by the customer.

This is true only when the merchant follows all guidelines for each respective card environment - SWIPED or CARD-NOT-present. Also true that all authorization, signatures must be present...but important to include using only matching billing address for auth & shipmentand even CV2 or CVV verifyiers are in place. Registration w/ 'Verfied by Visa' program works to shift the risk liability back to card issuers.

Cardholder Liability

2007-08-03T15:18:00.000-07:00

Contrary to what credit card companies advertise, many times the consumer is held liable for fraudulent charges and their high-paid lawyers ensure that the burden of proof lays with the consumer. VISA Regulations require that the MAXIMUM a cardholder can be held liable for is $50 of any fraudulent activity. Mastercard has a similar policy. In practice, few issuers enforce the $50 maximum, and pass-on zero liability to the consumer. The only exception is when a customer disputes a charge that they were legitimately involved in and consented to. In these cases it is not a fraud or security concern.

Are there single use credit cards?

2007-08-03T15:16:00.000-07:00

I would like to find out more about this. If anyone here has good information to share, perhaps you could add it to the security section? That way my bank or credit card company would know my permanent credit card but the non-trusted or semi-trusted vendor would only have a single-use credit card number to add to their insecure database.

The consumer can prevent on-going fraud by using special one-time single-use disposable credit card numbers, generated for each individual transaction. These special numbers can include custom limits on the transaction amount and a short-term authorization/expiration date. Even reputable main-stream online vendors are forcing customers to agree to automatic subscription renewal charges and making it very difficult to opt-out. Single-use numbers are a way for the consumer to take back control.