Credit Card Processing with Oracle Applications Niraj Dhondi

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Credit Card Processing with Oracle
ApplicationsNiraj Dhondi
marchFIRST

• August 28, 2000

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Introduction

• Why do we need Credit Card Processing?
• Credit Card transactions account for most of the
  E-Commerce transactions.
• Challenges in implementing Credit Card
  Processing.
• Managing Security Concerns.
• Complex integration of different systems.
• Very little margin of error.
• Any issues will have direct impact on Customer
  Satisfaction.
• E-Commerce applications are considered as Credit
  Card not present transaction. The merchant owns
  responsibility in the event of dispute.

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Agenda

• Introduction to Credit Card Processing
• Key Decisions
• Order Entry
• Oracle Receivables
• Design Considerations
• Questions

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Introduction to Credit Card Processing

• Authorization
• Credit Card Information is validated.
• Available credit is reduced.
• Fraud detection and AVS check.

Payment System Sends Credit Card Info To Third
Party Payment System
Third Party System Sends the information To
Issuing Bank Or Credit Card Association
User Enters the Credit Card through a Web Based
Ordering System
I N T E R N ET
Payment System CyberSource CyberCash
Third Party Payment System
Issuing Bank Or Organization
User Enters the Credit Card through Oracle Order
Entry
Issuing Bank Authorizes the Transaction and
returns the auth code.
Third Party System Forwards the authorization
code to Payment System
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Introduction to Credit Card Processing

• Settlement and Credit
• Funds are transferred into the merchants bank
  account.
• Credits are also handled as part of this process.

Credit Card Information Comes after Authorization
through Oracle Apps or a online Order Entry
System.
Credit Card Information Send to Payment System
Through Internet Using a Secure Protocol
Payment System Sends Credit Card Info To Third
Party Payment System
Third Party System Sends the information To
Issuing Bank Or Credit Card Association
Funds are transferred To Merchant Account
I N T E R N ET
Payment System CyberSource CyberCash
Third Party Payment System
Order is processed and Shipped in OE. Then Order
is then invoiced in Receivables.
Issuing Bank Or Credit Card Association AMERICAN
EXPRESS DISCOVER
Merchants Bank
Funds Will be Transferred from Merchant bank
to The issuing bank In case of credit
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Introduction to Credit Card Processing

• Fraud Detection
• Payment Systems use proprietary software.
• Fraud is detected usually based on the historical
  trends.
• Some payment systems allow the merchants to set
  fraud tolerance levels.
• Address Verification(AVS)
• Compares the first three digits of customer
  billing address and zip code.

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Key Decisions

• Outsourcing Vs Custom Payment Solution
• Outsourced Payment System
• Provides a Cheap and Quick Solution.
• May not be as flexible enough.
• Self Managed System
• This solution is an expensive solution.
• You can build it to be flexible enough to satisfy
  your requirements.
• Custom System
• Very Expensive
• Highly Reliable
• Selecting a Payment System
• Implementation and Transaction Cost.
• Should provide a secure mode of transmitting
  Credit Card Information.
• Connectivity with the Merchants Bank.
• Easy integration with the existing
  infrastructure.
• Fraud detection.
• Ability to reconcile transactions.
• Good Customer Service and Technical Support.
• Support of other payment systems used by the
  merchant.

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Key Decisions

• Selecting a Payment System (Contd )
• Reporting capability.
• Ability to manually correct and process
  transactions.
• Ability to cancel authorization.
• Need a redundant system?
• Good to have a PC based credit card payment
  system as a backup.
• Integration Decisions
• Technologies to be used (Software, Programming
  Languages, and Database).
• Network Connectivity
• Hardware
• Resources

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Designing With Oracle Applications

• Scenarios for Design
• External Order Entry System with Oracle
  Applications.
• Entering Orders in Oracle Order Entry.
• Overview
• Order is entered in Oracle Apps or an external
  Order Entry system.
• Authorized during the booking process and
  Imported into Oracle Apps if coming from external
  source.
• Order goes through pre-defined order cycle
  (Picking, Packing, and Shipping).
• Order is then interfaced to Oracle Receivables
• After Auto Invoicing the invoice sent for
  settlement, credit memos for credit.
• A receipt is send through Lock box process to be
  applied against the invoices.

Order is entered Into Oracle Apps Or an
External System
Authorization
Picking, Packing, And Shipping
Receivables Interface And Auto Invoicing
Settlement And Credit
Lockbox Process
Order Entry
Receivables
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Order Entry

• Some Suggestions for User Interface Design
• Capture the following information during the
  Order Entry Process.
• Credit Card Number
• Card Holder Name
• Credit Card Type
• Expiration Date
• Billing address
• Validate the Credit Card Number during entry.
• Use List of Values for Credit Card Type and
  Expiration Date.
• Oracle Apps needs customization to implement the
  above features.
• Key Design Considerations
• Expired Authorizations
• Varies with the issuing bank (7-30 days).
• As a general rule cancel the existing
  authorization and re-authorize every 7 days till
  the order is shipped.
• Some vendors do not allow cancellation of
  authorization.
• Backorders and Partial Shipments.
• Happens if the some or all the items ordered are
  not available.
• Authorization Code can be applied only against
  one shipment and the remaining shipments need
  re-authorization.
• In case of failure during re-authorization how do
  we stop the remaining items from shipping?

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Order Entry

• Key Design Considerations (Contd ..)
• Negative Invoices (Gift Certificates, Coupons,
  etc.,)
• Ability to re-submit an order failed during
  Authorization.
• Instant reporting of any failures encountered
  (Alerts).
• Procedure to fix batch failures due to system
  issues.
• Authorization failures.
• Common errors encountered during authorization
• Bad or Missing Credit Card Number, Expiration
  Date.
• AVS Check Failed.
• High Fraud Score (Determine the threshold).
• Payment System or the network is down.
• Credit Card is full.
• Stolen Cards.

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Oracle Receivables

• Settlement and Credit Process
• Run it in a request set after Auto Invoicing.
• Credit Card fields are transferred as part of the
  Receivable interface.
• These fields are not visible through Receivables
  Forms.
• This is a batch process and thus money may not be
  reflected immediately in Merchant Account.
• The payment system will usually notify
  immediately in the event of errors.
• Applying Receipts and Credit
• Lockbox interface is used to apply receipts
  against invoices in AR.
• Payment systems will reject a negative amount for
  settlement unless it is sent as credit.
• Oracle Receivables does not allow credit to be
  applied against a Credit Memo.
• Error Handling
• Cannot change the Credit Card information in
  receivables.
• Fixing errors might be a challenge when the goods
  are shipped.

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Design Considerations

• Design for recovery from failures.
• Reconciliation is critical for success.
• Reporting will play a crucial role in early
  resolution of issues.
• Lots of testing.

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Common Issues and Challenges

• Credit Card Fraud.
• Handling Credit Card failures.
• Training Customer Service to handle Customer
  issues.
• Balancing the Accounts.
• Scheduled and Un Scheduled Outages.

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Contact InformationNiraj DhondimarchFIRSTPh
[phone]Email niraj.dhondi_at_marchFIRST.com