Track B · Products, channels and flows

You will be able to

• Draw the message sequence of each flow
• Explain holds, clearing, interchange, net settlement and merchant funding
• Handle timeouts with reversals (field 90)
• Follow stand-in and advices
• Walk the chargeback cycle

The lesson

1. Why it matters
2. The concept
3. Failures and how they are handled
4. The chargeback cycle
5. In the real world
6. Common mistakes
7. What to test

In the module

• The lesson, with diagrams, common mistakes and what to test
• A worked example you can change: Settlement: who pays whom
• Practice: 4 kinds of generated exercise, each with a step-by-step solution
• A quiz of 9 questions

Key terms

Advice

A message telling the other side about something already decided, such as an offline approval or a stand-in decision (0120, 0220, 0420). It needs an acknowledgement, not a decision.

Authorisation hold

Funds the issuer reserves after approving a dual message authorisation. The hold is released when the transaction clears, is reversed or expires.

Chargeback

The issuer returning a transaction to the acquirer through the network under a dispute reason, taking the money back.

Clearing

Exchanging the final transaction records between acquirer and issuer through the network, so the amounts are posted.

Cutover

The point where a host moves to the next business or settlement date. Transactions after it settle on the next day.

Echo test

A network management message (code 301 in field 70) sent to check that the link and the other host are alive.

Net settlement

Settling only the difference of what two parties owe each other for the day, instead of each transaction.

Network management message

An 0800 / 0810 message that runs the link rather than a transaction: sign-on, sign-off, echo test, key exchange, cutover.

Representment (Second presentment)

The acquirer sending a charged-back transaction again with evidence that it was valid.

Retrieval request

An issuer's request for a copy of the transaction record or receipt, often before a chargeback.

Settlement

The actual movement of funds between the banks for the cleared transactions, usually netted once a day per settlement date.

Sign-on

A network management message that tells the other side this node is ready to process. Hosts often refuse transactions until it is done.

Stand-in processing (STIP)

The network or a processor deciding on behalf of an issuer that is unavailable, within limits the issuer set, and sending the issuer advices later.

Timeout reversal

A reversal sent when no response arrived in time, because the issuer may have approved. The terminal or acquirer sends it until it is acknowledged.

Tools for this module: Transaction FlowsJourney Lab

Read the opening of the lesson →