Something looks a bit odd on this receipt. And sparked a little discussion in our office the other day. Specifically the mention of the Z3 code.

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On the receipt, it says “Response: APPROVED”, and even prints the Auth code. This suggests that on the ISO8583 level it got the positive authorization. However, for some reason, the terminal decided to tell to the card that it was unable to go online, 'Z3' and decline the transaction offline.

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Why then, is a decline code printed when the transaction was approved? Our consultant Olya explained! When the US was starting EMV adoption, cardholders were complaining that using a chip card for payments was very slow compared to what they were used to with magstripe. And consumers were used to presenting the card while groceries were still being scanned, and the final amount not yet known. To work around that, EMV introduced Quick Chip which alters some classic EMV steps, and this is where we see Z3 mentioned.

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1. The card is presented before final amount is known, placeholder amount is used.

2. The terminal sends Z3 in 2nd GenAC.

3. Card is removed.

4. Terminal sends online authorization message afterwards, as soon as final amount is entered, and transaction is approved/declined according the issuer response.

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Just another day in the world of payment processing, and definitely a topic that made for lively consultant conversation during lunch.