MasterCard Revised Standards for Authorizations Processing and New Data Integrity Fees Reminder

 

 

As previously communicated in past merchant network updates, MasterCard introduced a number of authorization processing changes that include: new methods to identify the type of authorization, changes to authorization reversal time frames, changes to the amount tolerance for T&E and gratuities, changes to chargeback time frames and the extension of incremental authorizations for all merchant types. Additionally, MasterCard is also implementing Data Integrity edits and a Processing Integrity Program to ensure the authorization changes are being adhered to.

These revisions will help Issuers effectively manage cardholders’ open to buy and chargeback protection maximum time frame limits, based on authorization types. MasterCard is implementing Data Integrity edits to ensure adherence with the authorization changes. Please refer to the charts below for details.

MasterCard Authorization Changes

Description

Current

Effective October 2016

(Unless Otherwise Stated)

Full or Partial Authorization Reversals

 

Used to cancel a previously authorized transaction (full reversal) or when the transaction amount is less than the amount approved (partial reversal)

 

Does not apply to:

  • MCC 5542  AFD
  • Contactless
  • Transit aggregated or debt recovery transactions
  • Preauth or auth with an expired chargeback protection period

 

  • 24 hours- Card present (non-T&E)
  • 72 hours- Card-not-present (non-T&E)
  • 20 days- T&E

 

 

  • 24 hours- Card present and card-not-present:

Submit a full auth reversal within 24 hours of known cancellation date of the sale

Submit a partial auth reversal within 24 hours of transaction date when sale amount is less than the authorized amount

15% Transaction Amount Tolerances

Authorization to settlement amount

15%

  • Hotel/Motel
  • Vehicle Rental
  • Cruise Lines
  • Related Repair

 

 

If the final transaction amount doesn’t exceed the approved amount by the associated %, the merchant is not required to obtain an additional authorization.

Authorization to settlement amount must match.  Incremental authorizations or authorization reversals must be submitted to match the authorization amount to the settlement amount.

20% Transaction Amount Tolerances

 

 

Authorization to clearing amount

20% for gratuities

  • Contact Chip (Signature, PIN, no CVM)
  • Magnetic Stripe (Signature, PIN, No CVM)
  • Contactless
  • Card-not-present

 

Authorization to clearing amount

20% Permitted for Gratuities

U.S. Region:

  • Contact Chip (Signature, no CVM)
  • Magnetic Stripe (Signature, PIN, No CVM)
  • Card-present key-entered
  • Card-not present - Effective March 27, 2017 Restaurant (5812), Fast Food (5814), are eligible for the 20% tolerance for gratuities. Chargeback protection will not be available until October 13, 2017.

 

Non-U.S. Region:

  • Contact Chip (Signature)
  • Magnetic Stripe (Signature or No CVM)

 

Gratuity must be added directly to  the authorization amount when:

  • Contactless
  • Contact Chip and PIN
  • Contact Chip Magnetic Stripe  (non U.S. Regions only)

 

All gratuity transactions must identified as preauthorizations

 

Incremental (Multiple) Authorizations and Chargeback Protection Extension

 

 

  • 3351-3441(Car Rental Agencies)
  • 4411 (Cruise Lines)
  • 3501-3999 (Hotels/Motels/Resorts)
  • 7011 (Hotels/Motels/Resorts- not elsewhere classified)
  • 7512 (Automobile Renal Agency-not elsewhere classified)

 

Available to all merchant types

 

An incremental authorization may be submitted at a later time to extend the chargeback protection period for the same transaction when summited with a zero dollar amount or it can be used to request an additional amount about the original authorization amount.

 

The 30 day chargeback protection timeframe is calculated from the date of the last approved authorization. 

 

Excluded:

  • MasterCard Contactless transit aggregated or debt recovery transaction
  • Installment billing payment transactions identified as preauthorization

 

For Chargeback Protection Extension:

Dual Message (authorization) issuers and Single Message System Debit MC issuers must be able to support these requests as 0100 or 0200 messages.

 

 

Chargeback Protection Timeframes

Reason Code 4808 (Authorization-Related Chargeback)

 

When chargeback protection period expires, issuers must release any block they have placed on the cardholder account as it relates to authorization.

 

Currently, the duration of the chargeback timeframe is not calculated from the authorization date to the transaction date.

 

Transaction must be cleared within 120 days of the authorization date

 

Effective April 2017

 

Authorization date to clearing date

30 days- Pre-authorization and incremental

 

7 days- All other MasterCard authorization types

 

Authorization to Clearing Timeframe

 

Authorization to Transaction Date timeframe currently not in existence

 

Only transaction date to settlement date specified:

  • Within 7 calendar days of purchase date

 

Transaction must be cleared within:

Dual message

  • Final: 7 calendar days from auth date
  • Preauthorization:  30 calendar days from auth date
  • Incremental:  30 calendar days from the last auth date

 

 

Processing Integrity Fees:  

 

Processing Integrity Fee Program

MasterCard is adding new processing integrity fees that will be applicable to authorizations that are not reversed or clearing within specified timeframes.

Pre-Authorization or Undefined Authorization

 

Criteria - A new fee of $0.045 will be assessed for each approved pre-authorization or undefined authorization that is NOT reversed or cleared within the following timeframes:

 

  • Pre-authorizations - 30 calendar days of authorization date
  • Undefined authorizations - 7 calendar days of the authorization date

 

Final Authorization

 

Criteria - A new fee of 0.25% (min $0.04) will be assessed for each approved final authorization when:

 

  • Final Authorization - transaction not cleared within 7 calendar days of authorization date
  • Final Authorization- transaction cleared in 7 calendar days from the authorization date, but the transaction amount is different than the authorization amount and an authorization reversal was not performed within 7 days.
  • Final Authorization- transaction did not clear and full authorization reversal was not submitted (e.g. transaction cancelled or timed-out authorization request)

 

 

Note: These fees will eventually replace the current Processing Integrity Fees for Late Reversals and No Clearing within 120 days of authorization.  There will be a period of time where the existing non-compliance fees for not clearing a transaction 120 days from the authorization date and the new fees will be billed.

 

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