MERCHANTS/PARTNERS/ISO COPY · 6. Revised Standards for the Payment Facilitator and Service...

Payvision Ref: Payvision-Upcoming Scheme Changes (v1.0)-October 2015 Page 1

UPCOMING SCHEME CHANGES

MERCHANTS/PARTNERS/ISO COPY


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DISCLAIMER

This document does not in any way replace the documents from Schemes. In case of any doubt, user

should always refer to scheme documents. This document is prepared by Payvision based on

information and previous experience with scheme changes and is therefore based on how Payvision

understands and handles scheme changes. By continuing to read this document, User accepts and

understands that the information contained represents Payvision’s guidelines based on scheme

guidelines. Payvision shall not be liable for any misinterpretation of the Scheme’s rules.


Contents

1. Introduction .............................................................................................................................. 4

1.1. Target audience ................................................................................................................ 4

1.2. Purpose of the guide.......................................................................................................... 4

2. Introduction of New 2 Series MasterCard BIN Range-Reminder .................................................... 5

3. Transaction Processing and Late Presentment Time Frames Reduced-AP, Canada, CEMEA, LAC,

U.S. ............................................................................................................................................. 7

5. Digital Activity Service Provider Pricing Details .......................................................................... 11

6. Revised Standards for the Payment Facilitator and Service Provider Programs-Reminder ............. 13

7. Announcing the MasterCard SecureCode Key Principles for Increasing Trust for Ecommerce

Transactions-Reminder ................................................................................................................ 15

8. Introducing a Processing Fee for Billing the Dispute Administration Fee (DAF)-Reminder ............. 17

9. Support of Revised Standards for Processing Authorizations and Preauthorizations-Reminder ...... 19

10. Revised Chargeback Standards—Errors in Processing .............................................................. 24


1. Introduction

1.1. Target audience

This document has been created for Payvision merchants/resellers/ISOs regardless of the acquiring

bank used. The document provides notice and information regarding scheme changes as announced

by the schemes.

1.2. Purpose of the guide

The purpose of this document is to inform merchants/resellers/ISOs of any upcoming scheme

changes that might have an impact on the users. The document will also remind users of general

scheme compliance changes, rules and mandates. This document does not replace official scheme

documentation, member letters and scheme bulletins. The document contains summary level

interpretation of such changes based on the understanding of Payvision.

Contact information

Should you wish to obtain further clarification about the details of the document, please contact the

Operations Department.

Tel: +31 (0) 20 794 23 30

Fax: +31 (0) 20 794 23 32

Email: [email protected]

mailto:[email protected]


2. Introduction of New 2 Series MasterCard BIN Range-

Reminder

What is changing?

To help ensure that MasterCard and its traditional and non-traditional customers are best positioned

to enable the next generation of payments, MasterCard is expanding the Bank Identification Number

(BIN) range by introducing a new range of 2 series BINs, to be processed in the same way as the

510000– 559999 series BINs are today. Both BIN series must be processed as MasterCard and

treated in the same manner. The BIN range series is the first six numeric values at the start of a card

number.

Current situation.

MasterCard cards start with 5 and Maestro cards start with 6.

What does the change mean?

• MasterCard will allow issuers to issue cards starting with 2.

• MasterCard rules will be applied to the new 2 series BINs as applied to existing MasterCard BINs

• Members must recognise, process, and route transactions on Permanent Account Number (PAN)s in

the 222100–272099 BIN range the same as the existing MasterCard BINs.

• The 2 Series BINs will be used for both tokenisation as well as real card numbers

• Card Verification Method (CVM) of both signature and Personal Identification Number (PIN) must be

supported for the 2 series BINs

• The 2 series BIN will be constructed in the Acquirer Reference Number as done to existing BINs

• The new 2 series BIN range will have the same impact as the existing MasterCard BIN range for the

following items:

– Products

– Rules

– Pricing and interchange

– Settlement and reconciliation

– Reporting

– Chargebacks

• Both card-present and card-not-present channels must be updated to process the new 2 series BINs

as MasterCard BINs

– Terminal configuration and software updates may be required to process 2 series BINs


– Ecommerce transactions may require updates to web interfaces to process 2 series BINs

– Shopping carts must recognize the card numbers in the 2 series BIN range as MasterCard

How will this affect you?

Payvision will carry out necessary system updates to ensure correct processing of the new 2 series

BIN. You are advised to make necessary changes to ensure that you can support the new BIN series

and can accept MasterCard cards starting with 2.

Effective date.

October 2016–June 2017 - Field testing of the cards with a 2 series BIN from each region will begin.

July 2017 - Issuance of cards containing a 2 series BIN to cardholders will begin.


3. Transaction Processing and Late Presentment Time Frames

Reduced-AP, Canada, CEMEA, LAC, U.S.

What is changing?

Visa will reduce and consolidate transaction processing time frames globally. The change will also

align Chargeback Reason Code 74—late Presentment chargeback time frames with the updated

processing time frames.

To simplify the Visa rules and promote faster processing, Visa will reduce transaction processing time

frames (i.e., the time from the transaction date to when it is cleared) and globally align the

chargeback time frames for Reason Code 74, effective 15 April 2016. This change will allow issuers to

better manage holds and reduce unnecessary cardholder complaints to merchants.

Current situation

Currently there are eight transaction types with different processing time frames, which may also vary

by region or country.


To simplify this framework and align it globally, Visa will consolidate these transaction types into

three categories:


You must take the following into account when capturing transactions within areas outside Visa

Europe.

Visa Electron

• Within five calendar days of the transaction date.


Visa Prepaid Load Service

• Within two calendar days of the Visa Prepaid Load Service date.

All other transactions

• Within eight calendar days of the transaction date.

• For transactions acquired in Japan, within 30 calendar days of the transaction date.

• For domestic Automated Fuel Dispenser (AFD) transactions in Malaysia, within two local business

days of the transaction date.

• For domestic merchandise returns and credits in the U.S., within five calendar days of the

transaction date.

Effective date.

15 April 2016


4. Visa Prepayment Transactions (Pay Now and Get Later) - AP,

Canada, CEMEA, LAC, U.S.

What is changing?

Effective for transactions processed on or after October 16, 2015, merchants will be permitted to

receive partial or full prepayment when items in a store are not immediately available or when the

customer cannot take items at the time, but will be delivered or provided at a later date.

Current situation

Previously, Visa Inc did not allow prepayment transactions.


The enabling of payment for merchandise or services advance, to be provided at an agreed time that

is later than the time of the transaction.

• Partial prepayment is less than cost of merchandise or services purchased and must be applied to

total obligation.

• Full prepayment must be equal to cost of merchandise or service purchased.


The merchant must provide all of the following in writing and the cardholder must consent to it at the

time of the first, or only, partial prepayment, or at the time of the full prepayment:

• Description of promised merchandise or services

• Terms of service

• Timing of delivery to cardholder

• Transaction amount

• Cancellation and refund policies

• Date and time that any refund privileges expire without prepayment forfeiture

• Total purchase price

• Any other charges (e.g., taxes)

The transaction receipt must include all required receipt elements plus the following prepayment

content.

• Prepayment amount.


• For cancellations, the cancellation confirmation.

• Full cancellation and refund policy including date and time that any cancellation privileges expire

(partial) or refund (full prepayment) without prepayment forfeiture.

• For partial payments, the word “Deposit” or “Partial Payment.”

• For balance payments, the word “Balance.”

• For full prepayment, the word “Prepayment” and the scheduled start date or delivery date of

merchandise or services.

Merchant Requirements

Effective date.

Already effective as of October 16, 2015.


5. Digital Activity Service Provider Pricing Details

What is changing?

Effective 1 January 2015, MasterCard mandated registration for Digital Activity Service Providers

(DASPs).

Current situation

MasterCard added a new type of service provider classification. This new classification of service

provider relates to organizations that support Issuer Wallets or Digital Activity Customers participating

in the MasterCard Digital Enablement Service (MDES), including programs that use MasterCard Cloud-

Based Payments (MCBPs), a deployment model supported by the MDES Digitization Service. At that

time, MasterCard also mandated registration for DASPs by Digital Activity Customers and other

customer types like Principal Issuers.

This bulletin provides the associated billing structure related to DASP registration fees.


Effective immediately, MasterCard will bill the initial customer (whether a Digital Activity Customer or

a Principal Issuer) that registers a DASP for an initial registration and annual renewal fee, applicable

to the following service provider types:

• Digital Activity Service Provider (DASP)

• Type 2 Third Party Processor (TPP)

• Independent Sales Organization (ISO)

NOTE: MasterCard will maintain its current policy of not billing the registration of a Data Storage

Entity (DSE).


If the initial acquirer terminates the service provider, the next registering acquirer will be assessed

the renewal fee. MasterCard will check the initial fee that was charged, and follow these guidelines

when assessing fees:

• If a service provider becomes a DASP first, the fee will be charged as a DASP fee.

• If TPP services are added, the fee will not be assessed as a TPP, and the DASP fee will remain the

same fee.


• If the DASP fee is less than the TPP fee, then a subsequent fee will be charged.

• If the new subsequent fee is greater than the initial fee, then the initial fee will be charged.

DASP Initial Registration Fee: USD 5,000

DASP Subsequent Registration Fee: USD 500

DASP Initial Renewal Fee: USD 5,000

DASP Subsequent Registration Fee: USD 500

Effective date.

Immediately.


6. Revised Standards for the Payment Facilitator and Service

Provider Programs-Reminder This is a follow up of changes sent to payment facilitators on Thursday, March 26, 2015.

MasterCard is implementing identification enhancements that will help identify the payment facilitator,

sub-merchant, and/or independent sales organization that may be participating in a transaction. This

will support the expansion of the payment facilitator model by enabling accurate acceptance location

information, strengthening fraud monitoring and authorization screening, and providing clarity about

the transaction to issuers and cardholders.

What is changing?

All payment facilitators must ensure that Sub-Merchant ID is populated in both authorization and

clearing/capture records. The Sub-Merchant ID must always be the merchant ID of the sub-merchant

whenever a payment facilitator is involved in a transaction. This value is assigned by the payment

facilitator.

The following field must contain the sub-merchant’s information instead of the payment facilitator’s

information:

Sub-Merchant ID-This field contains the Sub-Merchant ID which must be the merchant ID of the

sub-merchant assigned by the payment facilitator.

Current situation

Currently, MasterCard allows acquirers to populate the payment facilitator location information in the

merchant data fields in transactions. The payment facilitator populates merchant data with payment

facilitator data instead of with the sub-merchant data. This prevents MasterCard, issuers, and

cardholders from knowing the details of the actual merchant with whom they are transacting.

Moreover, payment facilitators and independent sales organizations involved in a transaction are not

clearly identified.


Payment facilitators must populate Sub-Merchant ID in both authorization and clearing/capture

records.



Payment facilitators will need to make system changes to ensure that Sub-Merchant ID is sent to

Payvision in authorization and clearing/capture. A separate notification detailing the exact changes

payment facilitators need to make will be sent out the first week of September.

Effective date.

Already effective.


7. Announcing the MasterCard SecureCode Key Principles for

Increasing Trust for Ecommerce Transactions-Reminder

What is changing?

Due to the number of recent bulletin articles, MasterCard would like to summarize its three guiding

principles to help establish better trust in the online payment ecosystem.

MasterCard SecureCode Key Principles

MasterCard summarizes the following key principles to help increase trust in the online payment

ecosystem for MasterCard SecureCode transactions

Principle 1

If the transaction’s authentication request did not process through the MasterCard SecureCode

Directory Server, then the merchant cannot claim benefits from the MasterCard SecureCode program

(which includes reduced interchange, where available, or liability shift for the transaction).

Authorization and clearing messages must be flagged as non-SecureCode messages when submitted

by the merchant.

Principle 2

If the transaction’s authentication request did process through the MasterCard SecureCode Directory

Server, and the merchant chooses to bypass the issuer’s request for cardholder authentication or the

cardholder failed the issuer’s authentication challenge (denoted as PARes status = N), then the

merchant cannot claim benefits from the MasterCard SecureCode program. In such cases, the

merchant must submit the transaction as non-SecureCode in both the authorization and clearing

messages.

Principle 3

If the authorization transaction details indicate that the transaction processed through the MasterCard

SecureCode Directory Server, the issuer must ensure its system has been updated to recognize valid

SecureCode transactions. Valid MasterCard SecureCode transactions include merchant-only

transactions, where the merchant has attempted to authenticate the cardholder but authentication

was unavailable.

Current Situation

Recently, MasterCard has made several announcements addressing updates to the MasterCard

SecureCode program. There is no summary to highlight the key principles.



Merchants are advised to remember MasterCard Securecode key principles when handling secure

transactions.


Liability is borne by the merchant when choosing to process transactions that are not secure or when

a merchant chooses to bypass authentication.

Effective date.

Immediately.


8. Introducing a Processing Fee for Billing the Dispute

Administration Fee (DAF)-Reminder

What is changing?

MasterCard introduced a Dispute Administration Fee (DAF) that will be automatically credited to the

successful party in the dispute and debited from the unsuccessful party. This applies to chargeback,

second presentment and arbitration chargeback (when applicable). The DAF will also apply to

arbitration cases when the filing party is favored.

The DAF is applied to all dispute messages (chargeback, 2nd presentment, arbitration chargeback)

and for all chargeback reason codes. This new fees is applicable to all Intra-European and Inter-

European chargebacks.

Current situation

Before introduction of this fee, the only fee that was charged by Payvision to merchants was the

chargeback processing fee indicated in the merchant contract.


MasterCard will automatically deduct from or refund to Payvision the DAF whenever disputed

transactions are processed. This means that Payvision will pass on the fee to you for every disputed

transaction on top of the chargeback fee that is stated in your contract.


The fee will be deducted from you as indicated below:

1st chargeback- The issuer will be credited with EUR 15, and Payvision will be debited with EUR 15.

This means that Payvision will automatically be charged EUR 15 paid to the issuer. This same amount

of EUR 15 will be passed on to you for every intra-European and inter-European chargebacks.

Second presentment (representment) - Payvision is credited with EUR 15 and the issuer is

debited with EUR 15. This means that the issuer will return the fee that Payvision paid, and passed on

to you when chargeback came in. This same amount will be refunded back to you for every intra-

European and inter-European chargebacks.

Arbitration chargeback (2nd chargeback) - The issuer is credited EUR 30 and Payvision is

debited EUR 30. This same amount of EUR 15 will be passed on to you for every intra-European and

inter-European chargebacks.


Arbitration case Filing- Payvision will be allowed to collect EUR 30 from the issuer if the case is

resolved in favor of the merchant. This same amount will be refunded back to you every intra-

European and inter-European chargebacks if the case is resolved in your favor.

Effective date.

2 August 2015 (1st billing on 9 August 2015) for 1st chargebacks.

20 September 2015 (1st billing on 27 September 2015) for 2nd presentments.

8 November 2015 for arbitration/2nd chargebacks (1st billing on 15 November 2015).

27 December 2015 for arbitration cases for MasterCard non-ATM filed as of that date.


9. Support of Revised Standards for Processing Authorizations

and Preauthorizations-Reminder

What is changing?

MasterCard previously announced changes that impact how authorizations were sent within Europe

region. MasterCard is stressing the importance of coding authorizations indicated by MasterCard.

MasterCard is also announcing that the same changes will be applicable in all regions worldwide

effective October 2016. An authorization for an amount greater than zero may be coded as a

preauthorization, final authorization, or undefined authorization in line with the following

requirements.

In the Europe region and effective 14 October 2016 in all other regions, an acquirer is advised to

identify a MasterCard transaction authorization request as a pre-authorization if:

1. Authorization is requested for an estimated amount that is greater than zero

2. The transaction might not be completed for reasons other than technical failure or lack of full

issuer approval; for example:

a. When the cardholder will be offered the choice at a later time to complete the transaction with

another payment means (such as when checking out of a hotel or returning a rental car);

b. When the products ordered by the cardholder might be later found to be out of stock

c. If the mobile phone number for which the cardholder has requested a top-up is later found not to

exist.

All clearing messages corresponding to a preauthorization must be presented within 30 calendar days

of the authorization approval date.

A MasterCard transaction authorization request may be identified as undefined if:

1. Authorization is requested for an amount greater than zero; and

2. The final transaction amount may differ from the authorized amount; and

3. The transaction is not expected to be cancelled after the authorization request is approved in full

by the issuer (excluding non-completion for technical reasons such as telecommunications failure or

terminal failure).

Effective 14 October 2016, all clearing messages corresponding to an undefined authorization must

be presented within seven calendar days of the authorization approval date.


A MasterCard transaction authorization request may be identified as a final authorization if:

• It is requested for the final transaction amount.

• The transaction may no longer be canceled after the authorization request is approved in full

(excluding non-completion for reasons of technical failure).

If an acquirer or merchant uses the final authorization, then in a dual message environment:

1. Any transaction corresponding to an authorization identified as a final authorization must be

presented for clearing within four business days of the authorization approval date; and

2. The presented transaction amount must equal the authorized amount.

Effective 14 October 2016, an acquirer is advised to identify a MasterCard transaction authorization

request as a final authorization if:

1. Authorization is requested for the final transaction amount; and

2. The transaction is not expected to be cancelled after the authorization request is approved in full

by the issuer (excluding non-completion for technical reasons such as telecommunications failure or

POS terminal failure).

Effective 14 October 2016, the clearing message corresponding to a final authorization must be

presented within seven calendar days of the authorization approval date.

Preauthorizations—Maestro Transactions

In the Europe Region, the rule on this subject is modified as follows.

Preauthorizations are permitted for card-not-present Maestro transactions when completed in

accordance with the requirements set forth below. With the exception of transactions occurring at

automated fuel dispensers, pre-authorizations must not be used for Maestro transactions in any

Card-present environment. The acquirer must ensure that the authorization request for card-not-

present Maestro transaction for an amount greater than zero is identified as a preauthorization if:

1. Authorization is requested for an estimated amount; or

2. The transaction might not be completed for reasons other than technical failure or lack of full

issuer approval; for example:

a. When the cardholder will be offered the choice at a later time to complete the transaction with

another payment means (such as when checking out of a hotel or returning a rental car);

b. When the products ordered by the cardholder might be later found to be out of stock; or

c. If the mobile phone number for which the cardholder has requested a top-up is later found not to

exist.


Any card-not-present Maestro transaction clearing message corresponding to a preauthorization must

be presented within seven calendar days of the authorization approval date. The presented

transaction amount must equal the approved amount.

Final Authorizations Maestro Transactions

In the Europe region, the acquirer must ensure that any authorization request for an amount greater

than zero is identified as a final authorization if:

• The transaction may no longer be cancelled after the authorization request is approved in full by the

issuer (excluding non-completion for technical reasons such as telecommunications failure or POS

terminal failure); and

• The authorization being requested is for the final transaction amount.

In addition, the rule on the subject is modified as follows:

• Effective through 13 October 2016, any transaction clearing message corresponding to a final

authorization must be presented within four business days of the authorization approval date.

• Effective 14 October 2016, any transaction clearing message corresponding to a final authorization

must be presented within seven calendar days of the authorization approval date.

In the Europe region and effective 14 October 2016 in all other regions, a merchant must inform the

cardholder of any estimated amount for which authorization will be requested and must obtain the

cardholder’s consent to the amount before initiating the authorization request. This requirement does

not apply to:

• Contactless transit aggregated or transit debt recovery transactions;

• Automated Fuel Dispenser (AFD) transactions (MCC 5542); or

• An authorization requested for an amount otherwise approved by the cardholder as the final

transaction amount.

Authorization When the Cardholder Adds a Gratuity

In the Europe region and effective 14 October 2016 in all other regions, the following procedures

apply to transactions in which the Cardholder adds a gratuity:

• If the merchant obtains an authorization identified as a preauthorization (in all regions) or an

undefined authorization (in all regions except the Europe region), the transaction amount must not

exceed the authorized amount for the purpose of adding a gratuity, unless the transaction is a card-

present transaction that is neither a chip/PIN transaction nor a contactless transaction.


• If the merchant obtains an authorization identified as a preauthorization (in all regions) or an

undefined authorization (in all regions except the Europe region) for an estimated amount, and the

transaction amount exceeds the authorized amount, the merchant may request an additional

authorization.

• When the transaction amount must not exceed the authorized amount for the purpose of adding a

gratuity, any gratuity must be included in the authorization request.

• When the gratuity amount must be included in the authorization request, the issuer must not place

a hold on the cardholder’s account in excess of the authorized amount.

Current situation

Since January 2013, MasterCard required acquirers and merchants in Europe region to ensure proper

identification of authorizations as either pre-authorizations or final authorizations. Other regions are

currently not mandated by MasterCard to follow the authorization identification.


Merchants within the Europe region not following the MasterCard mandate need to ensure that they

send authorizations as indicated above. Merchants in other regions outside Europe must be aware

that MasterCard will now require same identification to be followed worldwide when sending out

authorizations.


All merchants must ensure compliance with MasterCard regulations. MasterCard is introducing

monitoring programs. These programs will identify merchants not in compliance with MasterCard.

Merchants will be charged fees whenever identified by MasterCard to be out of compliance.

1. Authorizations Not Reversed or Cleared Processing Integrity Fee Program

Monitoring and reporting for the new Authorizations Not Reversed or Cleared Processing Integrity Fee

Program.

2. Final Authorization Not Meeting Necessary Requirement Processing Integrity Fee Program

Monitoring and reporting for the Final Authorizations Not Meeting Necessary Requirement Processing

Integrity Program.

3. Undefined Authorization and Preauthorization Data Integrity Programs

Monitoring and reporting period for the Undefined Authorization and Preauthorization Data Integrity

programs.


Non-compliance assessments for acquirers for the data integrity programs.

Revised compliance standard for undefined authorization data integrity program.

NB: MasterCard clarified that authorizations for recurring transactions should NOT be coded as pre-

authorizations since the final amount is already known and agreed with the cardholder. These should

be sent as final authorizations instead.

Effective date.

Europe Region- Already effective

Other Regions- October 2016

Payvision will send out more information in the coming months about how these changes will be

implemented to regions outside Europe.


10. Revised Chargeback Standards—Errors in Processing

What is changing?

MasterCard has combined the errors in a processing family of chargebacks under one chargeback

message reason code.

Current Situation

Currently, the impacted chargeback reasons codes existed separately.


MasterCard is announcing the collapse of the following chargeback message reason codes under

4834:

• 4831 (Transaction Amount Differs)

• 4834 (Duplicate Processing)

• 4842 (Late Presentment)

• 4846 (Correct Transaction Currency Code Not Provided)

Chargeback message reason code 4834 has been renamed Point of Interaction Error.

Chargeback message reason code 4850 (Installment Billing Dispute) has been moved to the new

Domestic Chargeback chapter.

Chargeback message reason code 4863 (Cardholder Does Not Recognize—Potential Fraud) has been

re-categorized under the fraud-related chargeback family and will be rewritten for clarity at a later

date.


Chargeback Message Reason Code 4834—Point of Interaction Error

All of the conditions and requirements previously included in message reason codes 4831

(Transaction Amount Differs), 4834 (Duplicate Processing), 4842 (Late Presentment), and 4846

(Correct Transaction Currency Code Not Provided) have been rewritten for increased clarity and are

now included in this revised code.

Effective date.

15 April 2016

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