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
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
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.