Airport NL 0415, Article_Credit_Cards

Credit Card Systems and Gate Way Solutions for your operation.

We at SKIDATA are often asked for credit card systems to be part of the overall parking system. Clients often think in terms of only front end equipment and don’t necessarily know what has to happen in the background before such systems can be put in place and activated. I am often asked to explain Clearing Houses (also called Merchant Service Providers) and the parking providers. There is no question that the rules of engagement in the Credit Card industry are somewhat murky to the causal observer. The fact is that when you insert your credit card in a card reader, multiple entities across the country come into play all within seconds. Complicating things even more are the ever changing PCI DSS requirements (Payment Card Industry Data Security Standard). Ultimately, compliance is about how Credit Card information is used, formatted, stored and transmitted and this has become even more problematic with ever changing standards. Parking operators can expose themselves to substantial fines if they do not comply with these security requirements. It’s important to understand that these new standards apply to the manner in which management firm(s) operate their parking operation and how they maintain their books and manage such information in the office. In particular, how they store and manipulate credit card information in their back office must conform with PCI standards, otherwise they can be subject to severe financial penalties.
    
Fortunately all this can be made easier if you start off by choosing a PCI compliant parking and revenue control system such as SKIDATA’s Parking.Logic application. A gateway solution provider such as Six Payment Services allows you to selectively interface with any of the hundreds of Clearing Houses, often times at a reduced cost. Such firms can assist you in meeting your technical, financial or informational criteria associated with Credit Card processing. With a Gateway Provider you’ll have access to any clearing house in the country so your bargaining position is augmented. Plus you’ll enhance your ability to customize a solution to meet your needs. They will instruct you and your IT people in all aspects of what needs to be done from their vantage point.

Clearing Houses and Gateway Providers work together for you along with Interchange systems, Issuers, and Banks within the overall credit card process. All play an important role not only relative to rates they charge for the service, but equipment needed on premises, transaction speeds, back ups, customizability, reports and the way the information is formulated. Gateway providers can customize technical solutions that Clearing Houses simply will not do or provide.  Many offer Web based solutions, but not all. If your future plan calls for using the internet, make sure they can accommodate your needs.

We all know how important credit card payments are to retailers, parking operators and virtually all businesses that deal with payment transactions. The concept of service providers, clearing houses, issuers, real-time processing verses batching, reconciliation, charge backs, BIN, authorization & settlement always seem to surface but may or may not be understood by most users.  Let’s explain these terms and what you as a parking operator need to know and do to handle Credit Cards in a legal and correct fashion.

  1. Merchant: Company accepting credit card payments
  2. Clearing house: A generic term mostly used in the parking industry to identify MSP (Merchant Service Provider)
  3. Issuers: Companies that issue the card to the card holders.  They control the card holder accounts and authorize or decline authorization requests.
  4. Real-time processing: High-speed real-time authorization (approval or declined) while the parker is on site.  
  5. Batch processing: All transactions are accepted offline without authorization. Authorizations are completed when the batch file is processed.
  6. Reconciliation: Comparing transaction volumes (trx count + amounts) to ensure that all systems between the parking payment application and the bank account all show the same data.
  7. Charge backs: Official dispute by the card holder to the issuer received by the merchant from the MSP.
  8. BIN: The first 6 digits of a card number.  These identify the issuer.
  9. Authorizations request:  First request in the 2-step credit card process.
  10. Settlement: The final (second) step confirming that previously authorized amount can now be processed for payment.
  11. MSP: Merchant Service Provider.  The organization that the merchant has contracted with to accept credit card payments, handle the processing and send deposits to the merchant's bank account.
  12. Interchange systems: These are VISA and MASTERCARD systems connecting to the MSP’s and the issuers.


Make sure you ask the question when buying parking systems as to whether the manufacturer is validated with card security standards: PCI DSS or PA-DSS. Visit Visa’s site for the list of PCI-DSS Validated service providers. Check the PCI Security Standard Council site to see the list of PA_DSS Validated Payment Applications to see who is certified and above all who is current. Remember that these Credit Card security standards may change yearly. Firms like SKIDATA and others are continually upgrading their equipment and software to meet these standards and all these improvements must be validated yearly. It’s up to the client to do their homework, prior to purchase.

Let’s look at the back end of these systems, how they work and what you as owner –operator should be prepared to do if you’re not already accepting Credit Cards. Credit Card processing involves two steps. The first is an Authorization request, where an electronic request is sent through multiple parties to either approve or decline the transaction. The second step is a Settlement, a confirmation of payment where all parties settle their accounts and the merchant receives deposits in their bank account and the card holder’s account is charged. To understand these two easy steps much has to be accomplished in the blink of an eye.

Here is what really happens when you insert that card.
The authorization request initiated by a reader is channeled to the issuer (via the gateway solution, the MSP, the interchange system and many other parties). The issuer approves or declines the authorization request and the response is sent back to the pay-station the same route used to initiate the request for authorization.  Please note that it is not the gateway solution, nor the MSP, not even VISA / MasterCard that approves or declines an authorization request.  It is the issuer, the organization with which the card holder has the account.  The pay station receives the authorization response and completes the transaction accordingly. At the end of the business day, previously authorized transactions are settled to the MSP and the MSP credits the merchant’s Bank account.  Separately, transactions are settled by the MSP to the interchange systems. The interchange systems pay the MSP and debits the issuer’s accounts. The issuer posts the transaction to the card holder’s account and the card holder pays the issuer.  

The good news is that your local system supplier can help put you in touch with a gateway provider or MSP or work directly with your existing providers to make this process easy. All Clearing Houses (MSP) have their own particular requirements, but a good Value Added Reseller will put the system together according to your choice of gateway provider or clearing house, so you need not concern yourself with the mechanics other then selecting the right partner for your needs.

We all want to know if the equipment will accept the card and do it fast.  These real time systems are fast and accurate. Credit Card processing is so accepted by patrons that for most facilities that have repeat users, Credit Card users will account for 80% of all transactions made within that parking facility within a few months after installation. Not only do these systems speed things up within the parking structure, they eliminate fumbling around for cash and they virtually guarantee revenues collected, so credit card acceptance is a win-win for everyone.

If a card is bad it will be declined and the patron will generally use another card to get out, assuming they don’t want to use cash. Systems are designed to give the parking operator various management options which are too numerous to mention here. Most operators will generally select the acceptance of all cards when communications go down and when restored all cards accepted during that period will then be sent for authorization. This does two things: it keeps traffic flow uninterrupted within the parking facility (an important service to patrons) and ensures collection for the most part because operators know that most of the transactions will be approved as good cards.

Now that high speed internet connections are so affordable, parking operators can cost justify high-speed real-time credit card processing. Credit card processing is a wonderful and essential tool to improve operations and secure revenue. It can be part of your original parking purchase or purchased after the fact. They can be used at cashier booths, Pay On Foot stations or even as a form of entry known as “credit card in / credit card out”. If and when you elect to go to a Credit Cards system, do it well. Know your options. We’re always willing to assist. Remember, Credit Card systems operate 24/7 and no hard currency changes hands. Therefore, revenue control is optimum, equipment is less likely to be vandalized and as a customer convenience, they can’t be beat!

Authors: Pierre Koudelka, former Midwest Regional Manager For SKIDATA, Inc. and Fabien Pesenti of 6 Card Payment Services

SKIDATA AG (Headquarter)
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