There was another thing I remember from the live-operator telephone authorizations:
If the charge was to be denied, the live-operator would tell the merchant a one-digit status code number as well. Certain numbers meant that the merchant should not only refuse the charge, but confiscate the card as well. However, merchant were not told any more detail than that. This typically meant that the card had been reported lost, stolen, or fraudulently used.
I think there was also a status code that told the merchant to call the police.
Modern day near-instant on-line authorizations (with support built into modern point-of-sale systems) don’t work that way. The cash register sends the authorization request, and the server returns a packet with a simple Accept/Decline message. I don’t think there is any further information returned as to why the charge should be declined.
My family had a store in the 80’s and 90’s. There was a service you could get that checked credit cards and checks. If they said it was ok, they guaranteed that it was not stolen or forged. If it turned out later that it was, they would pay you the amount. I don’t remember if this was a service of the banks or a private company, but at one point this was so ubiquitous in my area that it was normal for any check payment to take a minimum of 15 minutes.
A close friend of mine worked in authorizations at one of the UK clearing houses in the mid 90s. One of their clients (a fairly niche card issuer but he would never tell me who) didn’t provide them with any real card data. Consequently, when they got an auth call for those cards the operators would go through the motions and make tapping, computer-input noises but the transaction would always be approved without references.
Back in the early 1970’s I was one of the people on the other end of the phone when they called in a purchase. Here’s how it worked.
The cashier had a preset authorization limit, which was sometimes increased (like during Christmas season.)
If the purchase was over the limit, the cashier called in for authorization. One interesting bit of loss control, if a call-in was necessary, the cashier was supposed to take the card and hang on to it.
When the call came in, we at the other end would grab our big, big, customer account books. They were updated pretty frequently (it might have been every day) so we could see the activity on the account.
If the transaction looked routine, we’d approve it, and make a note in the big book.
If it wasn’t routine, we’d call the supervisor. Not routine could include:
Multiple purchases in a short period of time, particularly purchases at more than one store; activity on an account that had been dormant for a long time; a purchase over the customer’s credit limit; a late payment history; an account that had been marked as having a lost/stolen charge card, or using a card that had been deactivated (that’s why the cashier was instructed to get the card before calling for authorization.)
When things were running smoothly, we could get a routine purchase authorized in less than 30 seconds from the time we answered the phone.
In addition, there were over-the-limit charges, like there are now, so you had to keep track of your charges. If you went over the limit, you needed to pay it down that billing cycle not to be charged. my parents, and also my aunt & uncle, kept all charges in a shoe box, and added them up before a shopping trip to determine what was left on the card.
A lot of businesses had in-store charge accounts, though, and those were easier to use that charge cards. At least in New York.
I might take a shopping list to a store for my parents or my aunt and uncle, and get it filled, and they’d read the list to make sure I stuck to it. There would usually be a note that I could charge a Coke if I wanted, but that was a all.
I know that sounds pretty old-fashioned, but it was the 70s, not the 50s. big changes with computerization in the 80s.
I was in a Target store in New Jersey in February. I noticed they had a slot to insert your cip card on their card swipe terminals, and even the little icons indicating “insert here” but the slot was blocked by a plastic cover. The teenage clerk hadn’t a clue what I was talking about when I mentioned chip cards. Everything was still mag stripes.
“I have to cut up your card” as a running gag item on tv comedy shows seems to be dying off. I guess With modern online checking, it’s not necessary to repossess or destroy a deadbeat’s card since its pretty much useless.
I worked in retail back in the 1970’s. We had those booklets of bad credit card numbers, and we did check them.
The credit card companies did try to enforce checking these. Once the booklet was printed & distributed, if you accepted a charge from a card number listed in the book, it was not honored by the CC company, and your store was out the money. Just like if you accepted a charge over your store limit without calling & getting an authorization, again, if it was bad the CC company would not honor the charge, and your store was out the money (a bigger amount). So there was a definate financial incentive for the store to follow thes procedures.
Also, the CC companies wanted you to take the card with you when you called for authorization, both to get the right number and in case you would be told to keep (confiscate) the card. Most clerks didn’t do this, but the CC companies tried to encourage this by giving rewards. I once called in, was told the card was NOT authorized, and I said that I had the card in my hand. So I was told to keep it, not give it back to the customer (they said that legally the card was the property of the CC company, not the customer) and that if I kept it and returned it with our weekly batch of credit slips, I would get a reward.
A couple of weeks later, I did get it – and it was a hefty reward – about equal to a whole day’s wages at my retail clerk pay. You can be sure that from then on I always kept the card when I made an authorization call, and so did the other clerks in the store.
The first time I had to use a credit card authorization device as an employee, I “practiced” with my personal card. It had a $500 limit, so I ran my card and typed in $499. It was accepted.
A few days later I used my card for a routine purchase and it was declined. That was how I learned that the $499 was assumed spent.
There’s a system in Australia and New Zealand known as “Telecheck” which is a device with a U-shaped reader you run the cheque through after entering the amount into the POS terminal. It basically verifies with the bank that yes, this cheque is good for the amount.
They don’t get a lot of use nowadays because hardly anyone pays for things in stores with personal cheques anymore - I probably had it happen a dozen times in the 15-odd years I worked in retail. Slightly more common were corporate/bank cheques cheques from clubs and community organisations, but they were still a really uncommon occurrence.