Merchant Category Code 7538 applies to automotive service shops including general repair, maintenance, oil changes, and specialized automotive services. This category serves both retail consumers and commercial fleet operations.
Key Information
This guide addresses the unique challenges of automotive service businesses, where high-ticket repairs and customer disputes require careful merchant management.
Typical Business Types
General Repair Shops
#1
Full-service automotive repair facilities handling mechanical and electrical repairs.
Quick Lube Centers
#2
Specialized facilities focused on oil changes and basic maintenance services.
Specialty Shops
#3
Businesses focusing on specific services like transmissions, brakes, or electrical systems.
Payment Processing Information
Transaction Types
1
In-Person Payment
Customers pay after service completion at the shop counter or office.
2
Phone Payment
Card details provided over the phone for authorized repairs or estimates.
3
Pre-Authorization Holds
Initial holds placed before service to ensure funds availability for estimated work.
4
Invoice Billing
Commercial fleet accounts billed periodically for services rendered.
5
Mobile Payment
On-site payment for mobile mechanics providing service at customer locations.
Common Payment Methods
Credit and Debit Cards - Standard payment method for retail automotive services
Commercial Fleet Cards - Specialized cards for business vehicle maintenance
Mobile Payments - Contactless and digital wallet transactions
Financing Plans - Third-party financing for major repairs
Cash and Checks - Traditional methods still used for smaller transactions
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Consumer Protection Laws - Fair pricing and service disclosure requirements
PCI Compliance - Payment card security standards
Common Fraud Signals
Unexpected High-Value Charges
Large repair bills without documented customer pre-approval or signed estimates.
Multiple Disputes from Same Customer
Repeat chargebacks from individuals who may be committing friendly fraud.
Phone Payment Without Verification
Card-not-present transactions processed without proper identity verification procedures.
Example Scenarios and Red Flags
Service Dispute Pattern
A shop experiences chargebacks claiming unnecessary work, often on high-value transmission or engine repairs.
Customer Claims Work Not Completed
Disputes asserting services weren't performed despite shop records showing completion and customer signatures.
Estimate Exceeded Without Authorization
Final charges significantly higher than written estimates without documented customer approval, leading to disputes.
Card Testing with Small Transactions
Multiple small charges that may indicate testing stolen card numbers before larger fraudulent purchases.
Fleet Card Misuse
Commercial vehicle cards used for unauthorized personal vehicle repairs or services.
Common Underwriting Questions
UW Tips Business
Confirm valid business licenses and ASE certifications
Verify proper insurance including garage liability coverage
Check for environmental compliance and hazardous waste disposal permits
UW Tips Financial
Analyze average repair order values and daily transaction volumes
Assess profit margins on parts versus labor
Review cash flow patterns and seasonal business variations
UW Tips Risk
Evaluate customer authorization and documentation procedures
Review chargeback history focusing on service dispute patterns
Assess controls for card-not-present and phone payment transactions
UW Questions Business
What types of automotive services do you provide and what is your specialty?
Do you service retail customers, commercial fleets, or both?
What percentage of work involves high-value repairs over $1,000?
UW Questions Payments
How do you handle phone payments for authorized repairs?
What percentage of transactions are card-present versus card-not-present?
Do you accept commercial fleet cards and how are these managed?
UW Questions Fraud
What procedures verify customer authorization for repairs exceeding estimates?
How do you document work completion and customer approval?
What fraud prevention measures protect phone and invoice payments?
UW Questions Compliance
Are your technicians ASE certified and is documentation current?
How do you handle environmental compliance for waste materials?
Are you compliant with PCI DSS requirements?
UW Questions Chargebacks
What is your chargeback ratio and what reasons are most common?
How do you document customer authorization for services performed?
Do you maintain detailed service records and customer signatures?
UW Questions Infrastructure
What shop management software do you use for estimates and invoicing?
How do you integrate payment processing with service records?
Are your systems capable of processing EMV chip cards?
Ongoing Monitoring
Transaction Monitoring
Flag transactions exceeding pre-authorized amounts without documentation
Monitor for unusual patterns in high-value repair bills
Track dispute rates by service type and employee
Compliance Checks
Maintain current certifications and licenses
Ensure proper environmental compliance for waste disposal
Conduct regular PCI compliance assessments
Security Updates
Use EMV chip card terminals for all card-present transactions
Implement strong verification for phone payment transactions
Deploy secure systems for storing customer payment information
Risk Assessment
Review estimate-to-final-bill discrepancies and authorization procedures
Monitor chargeback trends and implement corrective measures
Assess impact of high-ticket repairs on overall risk profile
Merchant Communication
Emphasize importance of detailed service documentation and customer authorization. Provide guidance on managing customer expectations during repairs. Support shops in implementing better phone payment verification procedures.
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