Recently, MasterCard announced rule changes and supporting requirements for acquirers and their merchants in the U.S. region to support partial approvals, authorization reversals, and balance response in order to improve debit card (including prepaid cards) purchase experience at the point of sale (POS). Support for these transaction types is required for all Debit MasterCard and Maestro card programs in the U.S. region. While Issuer support for these requirements was effective November 2008, MasterCard intends to implement this mandate for merchants and acquirers in three phases beginning May, 1 2010.
MasterCard decided to move forward with these requirements after extensive discussions with issuers, processors, program managers, acquirers, and merchants, where high decline rates were identified as a significant concern. MasterCard research in this area shows three main areas of concern:
- Customer lack of awareness of available balance in debit and prepaid accounts.
- Attempts to spend more than the balance available in their accounts.
- Hold placed on funds even when the cardholder changed his or her mind before the transaction was completed and the merchant never sent the appropriate reversal message.
MasterCard has worked with all parties to identify the best solution in the most appropriate time frame and has been actively working with all parties to gain their support for the following transactions:
- Partial Approvals - Merchants can systemically conduct split-tender purchases by allowing debit card issuers (including prepaid) to approve a portion of the original transaction amount in the authorization request when the transaction amount exceeds the funds available on the card. The merchant can then systemically initiate split-tender processing and obtain the remainder of the purchase amount in another form of payment.
- Balance Response – When prepaid issuers can transmit account balance information in an authorization response, cardholders will attempt fewer purchases that exceed their available balances, leading to fewer declines at the POS.
- Authorization Reversal – Authorization reversals will free up debit cardholders’ open to buy amounts by reducing issuer holds on available balances when transactions were not completed, therefore reducing the declines at the POS and the amount of cardholder complaints that are unpleasant for all parties involved.
MasterCard requires acquirers to support this implementation for merchants in 47 specific merchant category codes (MCCs) that experience the highest level of decline rates and for which merchant adoption of these terminal or system changes would be the least complicated because of the integrated system(s) involved. This requirement applies to all merchants in the following categories, including those submitting e-commerce and other card-not-present transactions:
Effective Date: May 1, 2010 5310 Discount Stores 5311 Department Stores 5411 Grocery Stores, Supermarkets 5499 Miscellaneous Food Stores-Convenience Stores, Markets, Specialty Stores, and Vending Machines 5541 Service Stations (with or without Ancillary Services) 5542 Fuel Dispenser, Automated 5812 Eating Places, Restaurants 5814 Fast Food Restaurants 5912 Drug Stores, Pharmacies 5942 Book Stores 5943 Office, School Supply and Stationery Stores 7829 Motion Picture-Video Tape Production-Distribution 7832 Motion Picture Theaters 7841 Video Entertainment Rental Stores 8011 Doctors—not elsewhere classified 8021 Dentists, Orthodontists 8099 Health Practitioners, Medical Services—note elsewhere classified 5111 Stationery, Office Supplies 5200 Home Supply Warehouse Stores 5331 Variety Stores 5399 Miscellaneous General Merchandise Stores 5732 Electronic Sales 5734 Computer Software Stores 5735 Record Shops 5921 Package Stores, Beer, Wine, and Liquor 5941 Sporting Goods Stores 5999 Miscellaneous and Specialty Retail Stores 8041 Chiropractors 8042 Optometrists, Ophthalmologists 8043 Opticians, Optical Goods, and Eyeglasses 4812 Telecommunication Equipment including Telephone Sales 4814 Telecommunication Services 5300 Wholesale Clubs 5964 Direct Marketing—Catalog Merchants 5965 Direct Marketing—Combination Catalog—Retail Merchants 5966 Direct Marketing—Outbound Telemarketing Merchants 5967 Direct Marketing—Inbound Telemarketing Merchants 5969 Direct Marketing—Other Direct Marketers—not elsewhere classified 8062 Hospitals
Effective Date: November 1, 2010 4111 Transportation—Suburban and Local Commuter Passenger, including Ferries 4816 Computer Network/Information Services 4899 Cable, Satellite, and Other Pay Television and Radio Services 7996 Amusement Parks, Carnivals, Circuses, Fortune Tellers 7997 Clubs—Country Membership 7999 Recreation services—not elsewhere classified
Effective Date: May 1, 2011 8999 Professional Services—not elsewhere classified 9399 Government Services—not elsewhere classified
Merchants should make sure their terminal and/or POS software supports processing of partial approval responses, split- tender transactions, the real-time reversal transaction, and display and/or print the account balance to meet the above effective dates. MasterCard is not requiring the printing or displaying of the account balance under MCC 5542. However, display or printing must be supported by the remaining 46 MCCs.