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Transaction Events have a predictable lifecycle and occur when a Payment Card is used by an Account Holder online or in-store. Understanding the lifecycle helps you answer questions from your Account Holders and design your user experience.
There are two types of transaction events you may receive:
AUTHORIZATION with a separate
AUTH AND CLEARING combined. Transaction events are sent to Highnote (the issuer) based on logic set by the merchant and the merchant’s processor.
Online transactions typically begin with a Verification Event as a means of preventing fraud. When your Account Holder adds their Card to a digital wallet or saves it as a payment method online, the merchant will request Highnote to verify that the Card is active and accurate. The verification step confirms that the basic information about the Account Holder and the Card, such as name, address, and CVV, match the expected values.
Verifications may be declined for several reasons. Examples include, but are not limited to:
Highnote provides a response code explaining why a Card’s verification was not approved.
When making a payment, it’s possible that the original Authorization needs to be adjusted or is no longer valid. For instance, your Account Holder may have placed an order, however, one of the items is not in stock and the original Authorization needs to be reduced.
In these instances, a merchant can use a Reversal to undo the Authorization. A Reversal can undo the total amount of the Authorization and resubmit a new Authorization or could reduce a partial amount for the original Authorization. Highnote does not have control over how this is implemented and the decisioning is driven by rules set by the merchant. This decisioning often varies across merchants.
Once a merchant has confirmed the full purchase amount, an event is sent to Highnote to Clear the Authorization. These Transaction Events are type
CLEARING, however an
AUTH AND CLEAR has the same impact on the funds in a Financial Account.
Most Clearings are associated with an Authorization and you can view the association for a given Transaction Event to other, related Transaction Events. There are instances where a Clearing is received without an Authorization, for instance when the issuer does not respond to the network. These are typically called a Forced Post and they are monitored by Highnote to ensure fraud is not occurring.
Once a Clearing is received, the Authorization Ledger is updated and the Cash ledger is decreased. This funds movement represents the outgoing funds to the merchant.
When a merchant needs to reverse a purchase, but a Clearing has already been sent, they do not have a way to update the original Authorization. In some cases, the merchant will send a new Authorization Event with the amount provided as a credit rather than a debit. Occasionally, merchants will send a Clearing with no authorization for the credit amount as well.