Credit-card declines are very often conditioned by the so-called TC-40 reports. Let’s see what they are, how they cause card declines, and how merchants can benefit from these reports.

What Is A TC-40 Report?

When a cardholder claims fraud, credit card issuers file a TC-40 claim for the given payment transaction. Then, the card brands, issuers and the merchant’s acquirer receive these claims in a report called the Risk Identification Service/RIS Report for Visa transactions and System to Avoid Fraud Effectively/SAFE report for MasterCard transactions. The latter includes each transaction’s raw data, such as currency code, fraud postdate, issuers BIN, region, and more.

TC-40 reports are mainly used by card issuers and card networks to measure the risk associated with each merchant. This data passes on to the merchant’s acquirer and/or processor. As a rule, this occurs on a daily basis.

The Difference Between TC-40 Reports And Chargebacks

A TC-40 is usually reported within days or even hours, and is issued based on fraud reported by customers. Merchants get notified of a chargeback within 3 months. Also, chargebacks can be caused by other reasons like customer dissatisfaction. Moreover, chargebacks directly impact merchants from the financial point of view.

Each report of fraud by cardholders results in a TC-40 and is included in the merchant’s RIS or SAFE report. These reports help most issuers to estimate the risk of fraud for each merchant. When the risk rating goes above the given threshold, the merchant won’t get authorized.

Sometimes, merchants are fined by a card brand if the amount of TC-40 claims goes beyond the given threshold. If this threshold is exceeded for over 10 months, the merchant may not be able to accept cards issued by the given brand.

What To Do With This Data?

Typically, merchants receive the raw reporting data from their processor. The faster the transactions are found fraudulent in their system, the faster they will be able to determine and prevent fraud.

The difference between determining this within days via the TC-40 report and waiting up to 3 months to get a chargeback may cost millions of dollars.

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TC-40 VS. Your Business

The easiest way to know if TC-40 reports have an impact on your decline ratio is to analyze your decline log. For this, you should set apart all the declines by issuers to find out if any of them is declining almost all transactions.

Another way is to track customer calls. If there is an increase in the number of customers claiming their cards were declined and the reason isn’t clear to them, this may mean something is wrong. Also, you can ask your processor to tell you the volume of TC-40s. If they don’t track the volume, they can contact the card networks to find out if TC-40s affect your business.

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