Authorization Improvements

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Presenter: Rafael Pavon, Global Business Optimization

Panelists:
Vanessa Sierra-Monteiro, Client Readiness
Beatriz Buendía, Client Readiness

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Welcome our Presenters and Panelists

Rafael Pavon, Sr. Director, Global

Business Optimization

Beatriz Buendía, Vice President,

Client Readiness

Vanessa Sierra-Monteiro,
Director, Client Readiness
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Logistical Information

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Business Enhancements
Authorizations Session

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 Presentation Overview

TOPICS

COVID 19 –Market Effects

LAC Authorization Landscape
Transaction Type Strategy
Optimizing the Ecosystem
Establishing an Authorization Strategy
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COVID 19 Market Effects

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9 ©2020 Visa. All rights reserved. Visa confidential
 Pandemic speeds up the move away from cash payments

“Although cash is still

the most important
from of payment in the
region, there has been
a steady move away
from cash, which was
accelerated by the
Covid-19 pandemic.”

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11 ©2020 Visa. All rights reserved. Visa confidential
LAC Authorization Landscape

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Latin America – Transaction Distribution by Channel
Total Authorization Transactions
Distribution Percent
80.0%
73.0%
70.0%
70.0%
62.2% 62.5%
60.0%

50.0%

40.0% 37.8% 37.5%

30.0%
30.0% 27.0%

20.0%

10.0%

0.0%
2018 2019 2020 2021

CNP CP

The card not present environment grew 26% in 2020 out pacing the growth of the previous year
by 11%. While in card present decreased 11.4% in 2020 as card holders turned to e-commerce
channels to perform their normal day to day purchases.

13 Source: VisaNet Gross Data 2018-01 to 2021-03 Including Account Verification, Returns, and Visa Direct Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer ©2020 Visa. All rights reserved. Visa confidential
Latin America – Approval Rate by Channel
Gross Transactions
Approval Rate
100.0%
95.6% 95.8% 95.5% 95.6%

90.0%

80.0%

70.0%
65.0% 65.3%
63.3% 63.6%

60.0%

50.0%

40.0%
2018 2019 2020 2021

CNP CP

While card present enjoys the benefit of high and stable approval rates, card not present, the
channel which shows the biggest growth is lagging severely behind. In 2018 the gap between
card present and card not present approvals was 30.6%, this gap as increased by 1.4%.

14 Source: VisaNet Gross Data 2018-01 to 2021-03 Including Account Verification, Returns, and Visa Direct Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer ©2020 Visa. All rights reserved. Visa confidential
PR3

Latin America – Declined Volume

January through March 2021
Decline Volume Distribution

$6.4
Billion

xx

Source: VisaNet Dedup Data 2018-01 to 2021-03 Including Account Verification, Returns, and Visa Direct Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer. Low ©2020 Visa. All rights reserved. Visa confidential
15 Risk is based on VAA score 1-30.
Slide 15

PR3 Pavon, Rafael, 6/24/2021

Transaction Type Strategy

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Evaluate Transaction Components
For the most up to date list check Visa’s technical manuals.

(F22.1) Entry Mode (F60.8) ECI Indicator (F25) Condition Code (F126.13) Environment Code
00 – Terminal Not Used 02 – Recurring 01 – Cardholder Not C- Credential on File
Present
01 – Key Entered 03- Installment R- Recurring Payment
08- Mail/Telephone,
10 – Credential on File 05- Authenticated Recurring or Installment I- Installment Payment

06- Merchant 3D Secure 51- Account Verification

07- Non-Authenticated 59- Ecommerce

08 –Non-Secure

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Typical Card Not Present Transaction Types

Merchant Initiated Card Holder Initiated

Transactions (MIT) Transactions (CIT)

Standing
Instruction

Installments Recurring Unscheduled E-commerce Credential on File

Credential on File

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 Account Verification Transactions
Percent of Approval Rate
Total Volume
61.4% 65%
8% March’20 March’21
Evaluate all transaction indicators sent as part of the
verification process, such as CVV2. EXPIRED CARD/NO EXP DATE 4%

TRANSACTION NOT PERMITTED 5%

Do not decline because the transaction has a value (Field 39) of
ERROR 8%
$0.00
RESTRICTED CARD 11%

Do not decline when ECI indicator (Field 60.8) is blank. DECLINE CVV2 FAILURE 11%

DO NOT HONOR 26%

Be aware, some merchants send status checks (Dollar Value
SUSPECTED FRAUD 32%
transactions instead of account verifications) for the purpose of
validating the account. 0% 5% 10% 15% 20% 25% 30% 35%
Typical Values

Entry Mode ECI Indicator POS Condition Pos Environment

01- Manual Entry Not Required 08- Mail/Telephone,

Recurring or Installment
10- Credential on File
59 – E-commerce

19 Source: VisaNet Gross Data 2018-01 to 2021-03 Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer and Visa Direct. Low Risk is ©2020 Visa. All rights reserved. Visa confidential
based on VAA score 1-30.
 E-Commerce Transactions Percent of
Total Volume
74.0%
Approval Rate
72.7%
62% March’20 March’21
Consider Evaluating False Positive Ratios and optimize any rules
above industry standards. TRANSACTION NOT PERMITTED 4%

RESTRICTED CARD 5%
Re-map Do not honor responses to non-generic declines to
OVER ACTIVITY AMT LIMIT 9%
better understand root causes and help reduce re-tries.
DECLINE CVV2 FAILURE 18%

Consider sending alerts to cardholders advising of declines SUSPECTED FRAUD 19%

including available balance (if permitted by local regulations). DO NOT HONOR 16%

NOT SUFFICIENT FUNDS 23%

Consider updating card design to avoid CVV2 being erased
from frequent use. 0% 5% 10% 15% 20% 25%
Typical Values

Entry Mode ECI Indicator POS Condition Pos Environment

00 – Terminal Not Used 07- Non-Authenticated 59 – E-commerce

05- Authenticated
01- Manual Entry
06- Merchant 3D Secure

20 Source: VisaNet Gross Data 2018-01 to 2021-03 Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer and Visa Direct. Low Risk is ©2020 Visa. All rights reserved. Visa confidential
based on VAA score 1-30.
 Recurring Transactions
Percent of Approval Rate
Total Volume
51.2% 53.4%
19% March’20 March’21
Participate in Token Service to take advantage of the token
lifecycle management. ERROR 2%
EXPIRED CARD/NO EXP DATE 2%
Evaluate participating in Visa Account Updater.
TRANSACTION NOT PERMITTED 6%

Avoid blanket declines due to missing CVV2 values with pos RESTRICTED CARD 7%
entry mode 10. SUSPECTED FRAUD 10%
DO NOT HONOR 14%
Evaluate using field 125 to take advantage of the original NOT SUFFICIENT FUNDS 56%
transaction id.
0% 10% 20% 30% 40% 50% 60%

Ensure your rules/host is correctly managing field 126.13 Pos

Environment Code.
Typical Values

Entry Mode ECI Indicator POS Condition Pos Environment

01- Manual Entry 07- Non-Authenticated 59 – E-commerce R – Recurring

10- Credential on File 02- Recurring 08-Mail/Telephone,

Recurring or Installment

21 Source: VisaNet Gross Data 2018-01 to 2021-03 Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer and Visa Direct. Low Risk is ©2020 Visa. All rights reserved. Visa confidential
based on VAA score 1-30.
 Card on File Transactions
Percent of Approval Rate
Total Volume
47.1% 58.8%
9% March’20 March’21
Participate in Token Service to take advantage of the token
lifecycle management.

Evaluate participating in Visa Account Updater.

Avoid blanket declines due to missing CVV2 values with pos

entry mode 10.

Evaluate using field 125 to take advantage of the original

transaction id.

Ensure your rules/host is correctly managing field 126.13 Pos

Environment Code.
Typical Values

Entry Mode ECI Indicator POS Condition Pos Environment

01- Manual Entry 07- Non-Authenticated 59 – E-commerce C – Card on File

10- Credential on File “ “-

22 Source: VisaNet Gross Data 2018-01 to 2021-03 Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer and Visa Direct. Low Risk is ©2020 Visa. All rights reserved. Visa confidential
based on VAA score 1-30.
 Installment Transactions
Percent of Approval Rate
Total Volume
73.5% 73.6%
2% March’20 March’21
Participate in Token Service to take advantage of the token
lifecycle management. ERROR 3%

RESTRICTED CARD 3%
Evaluate participating in Visa Account Updater. DO NOT HONOR 5%

DECLINE CVV2 FAILURE

Avoid blanket declines due to missing CVV2 values with pos 8%

entry mode 10. TRANSACTION NOT PERMITTED 5%

SUSPECTED FRAUD 19%

Evaluate using field 125 to take advantage of the original NOT SUFFICIENT FUNDS 55%
transaction id.
0% 10% 20% 30% 40% 50% 60%
Ensure your rules/host is correctly managing field 126.13 Pos
Environment Code.
Typical Values

Entry Mode ECI Indicator POS Condition Pos Environment

01- Manual Entry 07- Non-Authenticated 08- Mail/Telephone, I – Installment Payment

Recurring or Installment
10- Credential on File 03- Installment
59 – E-commerce

23 Source: VisaNet Gross Data 2018-01 to 2021-03 Excludes: Invalid Accounts, Invalid Amounts, Pickups and No Such Issuer and Visa Direct. Low Risk is ©2020 Visa. All rights reserved. Visa confidential
based on VAA score 1-30.
Optimizing Ecosystem
Response Code Use

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Response Code Usage
Remove Generic Response code usage to improve authorization effectiveness

Category 1 Category 2 Category 3 Category 4

Issuer will never Issuer cannot Data quality Generic Response
approve, do not re- approve at this (Revalidate Data codes (Reattempt
attempt. Time (Reattempt Prior to Reattempt). Allowed).
Allowed).
Decline response Indicate data These response
codes indicate the Temporary decline quality issues where codes provide little
account never condition that may invalid payment or or no value to
existed, has been change over time. authentication data acquirers/merchant
permanently has been provided. s in determining
blocked or has The issuer may their reattempt
permanent approve if valid strategy. Use should
product/regulator information is be kept at a
restrictions. provided. minimal.
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 Establishing an Authorization Strategy

Potential Next Step

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Establish an authorization performance discipline
Continuous Improvement Cycle

Optimize
authorization process

Utilize available
authorization tools

Invest in largest
opportunities

Identify Areas of
Opportunity

Use Analytical
tools

Review Historical
Performance
Improved Performance
Develop an Action Client Retention
Plan Improved Profitability
Customer Experience
Define Goals

Establish a
dedicated team

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Upcoming vBER Sessions
Visa is hosting a series of webinars to review select articles that appear in the October 2021 and January 2022
VisaNet Business Enhancements Global Technical Letter and Implementation Guide, Effective: 17 June 2021
Date / Time Webinar Topic
Tuesday, 13 July 2021 Visa Secure Updates
• 9 a.m. Eastern time Articles 3.7, 3.8 & 5.4
Tuesday, 13 July 2021 Visa Direct Updates
• 11 a.m. Eastern time Articles 2.8 & 2.9
Wednesday, 14 July 2021 Visa Token Service / Secure Credential Framework
• 9 a.m. Eastern time Articles 2.10, 2.11, 3.3, 3.4 & 4.1
Friday, 16 July 2021 Global Client Testing Process Overview
• 9 a.m. Eastern time

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Thank You!

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