These are codes placed into the terminal software by the acquiring member that govern the rules for whether transactions go online or are declined.
- The acquirer's conditions for approving the transaction offline,
- The acquirer's conditions for declining the transaction offline,
- And the conditions for sending the transaction online for approval due to issuer risk parameters.
The three types of TAC
The Terminal Action Code is not a single value but consists of three separate codes. Each is 5 bytes long and has the same bit structure as the TVR (Terminal Verification Results):
- TAC-Denial: If a bit set in the TVR is also 1 in this code, the transaction is declined offline without being sent online.
- TAC-Online: In a terminal capable of going online, if a bit in the TVR is also 1 in this code, the transaction is sent to the issuing bank for approval.
- TAC-Default: If the terminal needs to go online but cannot establish communication, or if it is a terminal that only operates offline, the TVR is compared against this code. If there is a matching bit, the transaction is declined.
Works together with IAC
The issuing bank also places three codes of the same structure on the card. These are called the Issuer Action Code (IAC). When making its decision, the terminal compares the TVR against both its own TAC values and the IAC values it reads from the card. In this way, the risk preferences of both the merchant's acquiring bank and the issuing bank are applied together in the same transaction.
Who determines the values?
TAC values are managed as a terminal parameter by the acquiring bank and are sent to the terminal through parameter loading. Card schemes publish recommended TAC values for each application. Banks can tighten these values according to their own risk policies. For example, a bank that does not allow offline transactions can define its TAC-Online values so that nearly all transactions are sent online.
