How to Minimize Loss of Revenues Due to POS Terminal Faulty

Before Point of Sales (POS) Terminals were				One of the most effective preventive method that I
introduced into credit card industry, the Card				have used to alleviate the above problem is to setup a
Companies deployed a manual sales slip system to				POS Terminal Settlement Control System.
acquire credit card sales transactions.				A POS Terminal Settlement Control System is
Since the introduction of POS Terminal system into				basically a system to compare all POS terminal batch
credit card industry, the system has grew incredibly.				settlement records submitted by the merchants with
The terminal system have taken over almost 100% of				the internal transaction authorization records (which
the manual sales slip system in developed and				were created during the authorization of the each
developing countries.				respective transactions).
Today, more than 90% of the credit card transactions				The trickiness of this control system is, one got to be
in the world are processed via terminal system. While				very well versed with the credit card sales
the system has brought a lot of benefits to the card				transactions activities in order to be able to setup a
industry such as speed and accuracy in processing				matching criteria. Some example of the matching
credit card sales transaction nevertheless, they also				criteria are:
have their weaknesses.				1. Merchant account matching
One of the major weaknesses of using a POS				2. Batch total transaction matching
terminal systems to process credit card sales				3. Batch total value matching
transactions is terminal faulty.				I will not go through in details on this matching criteria as
How can a Card Company loses revenues when				it can be very technical as it goes on.
POS terminal is faulty?				Once the control system identified a mismatched
POS terminal is just like any other electronic				batch, the whole batch is suspended from further
equipments that you use at home or office. Because it				processing. The suspended batch will be thrown into a
is an electronic gadget, it is prone to damages when				batch withheld file, for a staff to check the detailed
subjected to strong magnetic fields and lightning strikes.				transactions and compare against the internal
When a POS terminal is subjected to strong magnetic				authorization records. From my experience of going
field or being stroked by lightning, the memory chip in				through these records, you can find things like duplicate
the machine that stored credit card transactions can				processing, missing transaction, offline transactions, etc.
be corrupted and data can be lost. Once these				In addition to the batch matching module, the POS
happened, the merchants will not be able to perform				Terminal Settlement Control System should generate
batch settlements with the Card Company.				a weekly ageing report of unsettled transactions. The
If the merchant has a habit of performing daily batch				staff-in-charge should go through this report for
settlement, then the Card Company may get an early				unusual delay in settlements. Once an unusual delay is
alert when merchant complained of settlement				identified, the staff-in-charge should contact the
problems. However, if the merchant only does batch				merchant and request them to settle immediately or
settlement once a week or less frequent than that,				listen to their explanation if they do not intend to settle
such problems may only be known much later.				so soon.
If the POS terminals are supplied by the Card				Some immediate remedial actions (not exhaustive) that
Company, the Card Company has to be responsible				you can take are
for any financial losses suffered due to lost of				1. Delete duplicate transactions and repost the batch.
transactions or late processing of transactions. I have				2. Force post the suspended batches to bill
came across Card Companies that lost thousand				cardholders first (in order to avoid late presentment
dollars of revenues due to loss of transactions and				chargeback) and withhold the payments to merchants.
late processing of transactions.				Immediately send requests to merchants for original
How to minimize loss of revenues due to POS				sales slips for verification against the suspended
Terminal Faulty?				batches. Once resolved, repost the transactions
After knowing how transactions can be lost or				(without billing the cardholders) to pay merchants.
delayed processing from POS terminals, now we will				A lot of technicalities and detailed procedures are
discuss the corrective actions.				omitted to make it simpler for readers to understand.