What is a Voice Authorization Fee?

As a follow up to our article explaining Authorization Fees; we cover Voice Authorizations in detail below.  Read on for more information…

There are three different situations that have been categorized as “Voice Authorizations” in the credit card industry. Although the first is the case most commonly referenced, the other two cases fall into the same bucket and hold the same fee to the merchant.

 

Hardware / Software Failure or no Phone / Internet Connection

When the credit card terminal or software is not working or modem / IP access is not available to processes an authorization electronically, a merchant may use an 800 number to call in an authorization and obtain a response code. There are several items that must be entered over the phone including merchant ID, credit card number, etc. Regardless if the card is approved or declined, the merchant will be given a numeric response code, which should be recorded. Upon approval the merchant should retain the card information and perform a capture or settlement using the authorization code supplied when the processing equipment is operational or modem / IP access is available. Not using the supplied auth code and simply initiating a new transaction could result in a misuse of authorization fee. Click here for more information.

 

Issue with Physical Card

During the electronic authorization process, besides approval or denial sometimes there is a 3rd response noted as “Call Center” which means more information is required. When this happens the merchant must call the toll-free authorization phone number to validate the authorization. This typically occurs when there is a problem with the physical card.

 

Questionable Purchase Validation

As a consumer, have you ever got that call from your credit or debit card company to validate some recent purchases made to your account? This is also a “Voice Authorization” and is usually triggered by unusually high dollar or out of state/ out of country transactions. It can also be triggered by curious activity such as making several seperate purchases at a gas station and then making a high dollar purchase at Wal-Mart. The fraud departments at banks and within Visa / MasterCard utilize complicated algorithms and formulas to look for patterns of fraud and breaches of security all over the world.

 

Voice Auth Fees and How to Avoid Them

Regardless of how the Voice Authorization occurs there is a fee associated with it that is charged to the merchant account holder. This fee can range from 50 cents to $1.50 and is used to offset the additional cost of doing business for this type of more manually intensive transaction. While the second and third cases cannot really be mitigated by the merchant and are simply the nature of business, the 1st case can definitely be mitigated with preventative maintenance, knowledge and planning.

One of the most common situations that require voice auths is the internet or phone connection going down. While many businesses today run on internet (IP) connection, a good way to ensure that this does not go down is by having a high grade commercial router at your business instead of a standard home router. Also professional cabling and installation along with routine upkeep is recommended. The same advice goes for hardware and software. Installing appropriate updates and having regular maintenance on your equipment is necessary to prevent Friday night disasters. The good news is that most POS and similar equipment is relatively bulletproof and may only need upkeep or updates once every few years.

 

Have a Disaster Backup Plan

Not matter how much preparation you do, disaster is always a possibility. Ensure that you have an action plan should your hardware, software or electronic connection fail when you need to process transactions. This may be as simple as having a document handy with the Voice Auth number on it and your important account information such as your merchant ID. Your plan however could be as complicated as having back up hardware or even backup mobile devices with independent connections. Be sure your merchant services provider has educated you on your options. Should you have further questions please contact us.

– To learn about authorization fees please visit Authorization Fees

– To learn about misuse of authorization please visit Misuse of Authorization