Network Updates Spring 2016

Transcription

1 Network Updates Spring 2016 We are committed to working closely with you on achieving your business goals. As a part of this commitment, we carefully monitor Network changes and summarize them for your convenience. Following is the summary of information from American Express, Discover Network, MasterCard Worldwide and Visa U.S.A. regarding changes or updates to interchange rates, operating rules and regulations, and other changes that may impact your company. We encourage you to call your Relationship Manager or our Contact Center at the number located on your monthly statement with any questions you may have regarding this information. Except where otherwise noted, all changes are effective April 15, EMV EMV ATM and Automated Fuel Dispenser (AFD) Liability Shift Reminders Listed below are the liability shifts for domestic and cross-border counterfeit transactions by network: Dates Visa MasterCard Discover American Express October 2016 ATM Liability Shift 2 October 2017 Automated Fuel Dispenser Liability Shift 1 Automated Fuel Dispenser Liability Shift 2 Automated Fuel Dispenser Liability Shift 2 Automated Fuel Dispenser Liability Shift 2,3 ATM Liability Shift 1 1 Liability for counterfeit transaction shifts to party who does not have support for EMV. 2 Liability for various counterfeit transaction shifts to party who has least-secure support for EMV 3 Includes the US and its territories as well as the Caribbean, Central/South American region Visa October 2017 Automated Fuel Dispenser merchants have extended timeframe in consideration of cost/complexity October 2017 ATM liability for counterfeit fraud is assigned to party that is responsible for transaction not being done using EMV MasterCard October 2016 ATM Liability Shift October 2017 Automated Fuel Dispenser Liability Shift American Express Discover October Automated Fuel Dispenser Liability Shift October Automated Fuel Dispenser Liability Shift 1

2 Updates on Vantiv EMV Chargeback System Logic The Program: After the Chip Liability Shift went into effect in October 2015, merchants experienced a significant increase in chargebacks. Several of our clients have questioned their role in these chargebacks and asked for relief from the volume. The Change: Vantiv has implemented programming logic to our disputes systems to automatically process Visa and MasterCard chargebacks for EMV Chip Liability Shift (American Express and Discover chargebacks will not be included in the logic at this time). The logic will review the same transaction and EMV fields that a dispute representative reviews before making a decision on the dispute. The impacted reason codes are: MasterCard Chip Liability Shift MasterCard Chip/PIN Liability Shift Visa 62 - Counterfeit Transaction Chargebacks will be debited to the merchant when the indicators show: The card is a chip card The terminal is not chip enabled Transaction date is after 10/1/15 MCC does not equal to 5542 for fuel As of February 24 th logic was introduced to automatically represent invalid chargebacks when: Transaction date is prior to 10/1/15, or MCC is equal to 5542 for fuel and reason code is EMV On March 23 rd logic to automatically represent invalid chargebacks was implemented when the transaction: Has a POS Entry Mode of 05 or 07 for chip and contactless chip, or Was conducted on an EMV terminal with a chip card, or Is identified properly as ecommerce. Vantiv will continue to review EMV chargebacks to look for additional ways to identify those that can be handled systemically without merchant assistance. The Impact: Disputes meeting the criteria above will no longer appear on your Chargeback Pre-Notification reports (MD-413 or MD-900). This means merchants will no longer need to respond to Visa and MasterCard chargebacks with EMV reason codes, however, you will retain the option to request a reversal if you believe it s appropriate. 2

3 Visa Chargeback Management and Card Acceptance Guidelines for EMV The Program: Visa is providing best practices and reminders to help ensure accurate and efficient chargeback processing in connection with the EMV Liability Shift effective October 1, The Impact: Visa reminds merchants and acquirers that the Terminal Entry Capability field must contain a valid value and must match between authorization and settlement messages. Merchants may be subject to non-compliance assessments and loss of chargeback protection if the data is not accurate. Chargeback Reason Code 62 (Counterfeit Transactions, Condition 2, EMV Shift Liability ): o o o o o o o Issuers must not use this reason code to charge back counterfeit transactions when Central Processing Date is prior to October 1, Issuers must not use this reason code for U.S. AFD and ATM counterfeit transactions when Central Processing Date is prior to October 1, 2017 Issuers must not use this reason code for non-chip enabled cards (e.g., magnetic-stripe- POS Entry Mode 90 or 02). Issuers may use the Service Code, first byte value of 2 or 6 for identification of chip enabled cards Issuers must not initiate a chargeback for tokenized transactions that originated from a mobile payment devices that was fraudulently provisioned as it s considered account takeover fraud Issuers may only charge back counterfeit transactions using this reason code; lost or stolen, account takeover, and other fraud type are not eligible A transaction is protected from this reason code if full chip data was passed in the authorization message and for any chip transaction that was correctly processed from a contact chip-enabled terminal (Terminal Entry Capability=5) regardless if the card data was key entered, magnetic stripe read, contact or contactless chip. Issuers must ensure that they provide the appropriate information for chargebacks in the form of any declarations and member message test. This will help the acquirer to identify the issuers use of the chargeback. 3

4 Visa Clarifies Contactless Transaction Disputes as part of the EMV Liability Shift Rules The Program: The EMV liability shift encourages the adoption of contact chip technology to reduce card-present counterfeit fraud. The Impact: With the increasing interest in contactless cards and digital wallets, Visa is providing clarification on how the liability shift applies in these environments. The table below outlines EMV liability shift based chargebacks processed under Reason Code 62 (Counterfeit Transactions, Condition 2, EMV Shift Liability): Terminal Capability Magnetic Stripe and Contactless MSD / qvsdc* Card Capability Contact EMV and Contactless MSD / qvsdc* Magnetic Stripe and Contactless MSD Chargeback Invalid Chargeback valid for counterfeit fraud but invalid for account-takeover fraud Magnetic Stripe and Contactless qvsdc Contact EMV and Contactless MSD Chargeback Invalid Chargeback Invalid Chargeback valid for magnetic-stripe transactions but invalid for qvsdc transactions if full chip data was sent in the authorization request. Chargeback Invalid Contact EMV and Contactless qvsdc Chargeback Invalid Chargeback Invalid *qvsdc =quick Visa Smart Debit/Credit (chip contactless) Tokenized Transactions When initiating a chargeback for tokenized transactions using other reason codes, the issuer must include the primary account number and token data. Acquirers may represent tokenized transactions if they do not receive the token data in the chargeback. 4

5 MasterCard MasterCard New 2-Series MasterCard BIN Range Reminder UPDATE: The Vantiv host is available for MasterCard Series 2 testing. Merchants may contact their Relationship Manager for test plastics if preferred for use in initial testing. The Program: As previously communicated in Vantiv s 2015 Newsletters, MasterCard is adding new primary account BIN ranges to be processed in the same manner as existing range The Change: The payments ecosystem must be ready to support the 2-Series MasterCard BINs by October 14, All Vantiv platforms will support the MasterCard 2-Series BIN range. The Impact: Merchants must be able to accept the new MasterCard BIN range in both card-present and card-not present payment acceptance channels. The Timing: October 14, 2016 Payments ecosystem to be ready to support the new 2-Series BIN. January 2017 Issuers will be assigned the new 2-Series BINs, merchants should be prepared to accept the new BIN as cards begin to appear in the market shortly thereafter. Merchants identified as not being able to support the new 2-Series BIN may be subject to noncompliance fines. MasterCard Reminder to Maintain Accurate Account Information (Updated BIN Tables) The Program: Maintaining and using up-to-date BIN tables for authorizations is critical to the accurate and efficient processing of transactions. Proper identification of newly issued BINs, reissued BINs, product code changes, and preventing declines of valid account ranges can be achieved by maintaining accurate account range information. The Impact: MasterCard reminds customers about the importance of maintaining and using current BIN tables for authorizations to accurately facilitate the approval of transactions at the point of sale. MasterCard mandates that acquirers update their merchants systems within six (6) calendar days of MasterCard notification. Merchants are required to update BIN file data within their own systems upon receipt of files from Vantiv. The Timing: This requirement is already in effect. UPDATE: Merchants are currently being contacted by their Relationship Manager to ensure support of the change in receipt of the BIN file from monthly to weekly. 5

6 MasterCard Introduces Chip and PIN Liability Shift for Contactless Transactions The Program: MasterCard is announcing the addition of contactless transactions to the existing chargeback liability shift for chip transactions. The Change: Merchants may now be liable for fraud involving contactless transactions that exceed the Cardholder Verification Method (CVM) limit and were performed without a secure contactless CVM of either online PIN or CDCVM. (A CDCVM is a device CVM, such as Apple Touch fingerprint as the passcode to unlock the device or app.) The Impact: If a PIN-preferring contactless chip card is presented and the terminal is unable to support online PIN, and the transaction proceeds with a signature as the CVM, the merchant will be liable. Note: This change does not apply to low value tap-and-go transactions that do not require a CVM due to the (low) transaction amount and does not apply to counterfeit. Effective Date: APRIL 21, 2017 MasterCard Introduces Interchange Qualification Changes for SecureCode Transactions missing Accountholder Authentication Value (AAV) The Program: Merchants that support MasterCard SecureCode transactions must ensure their authorization systems are passing the attempts AAV correctly when merchant-only authenticated (cardholder authentication attempted by the merchant using 3D secure, however the issuer or cardholder didn t participate) transactions are identified. The Change: MasterCard will begin to downgrade MasterCard SecureCode transactions to non-securecode interchange rates if the Accountholder Authentication Value (AAV) is not present in authorization. All AAV values (including Attempts) must be sent to MasterCard, or the AAV value will be considered invalid and the transaction will be downgraded to the appropriate non-securecode interchange rate. The Impact: MasterCard Securecode transactions will be downgraded if: - The AAV was not present in the Authorization Request - The AAV was not properly formatted in the Authorization Request MasterCard will be monitoring settlement information to ensure that the data in the settlement record matches the data provided at the time of authorization for a transaction. Mismatches in the AAV data between authorization and settlement may result in the settlement record being rejected. The Timing: November 8,

7 MasterCard Announces New ecommerce Data Integrity Edits The Program: In an effort to ensure an accurate decisioning process, MasterCard is implementing new data integrity edits for ecommerce transactions participating in their SecureCode authentication program. The Change: The new data integrity edits defined below will be implemented and monitored by MasterCard. Acquirers/Merchants Data Integrity authorization edit to identify merchants that reuse the Accountholder Authentication Value (AAV) within their MasterCard SecureCode transactions. - If duplication of an AAV is identified within authorization summary reporting, it raises suspicion that the merchant reused an AAV to gain liability shift, rather than attempting to authenticate the cardholder as instructed via the SecureCode program. Data Integrity edit to identify instances where the Security Level Indicators (SLIs) provided in authorization do not match the SLIs provided in the settlement file submitted for processing. Issuers - This mismatch can cause incorrect chargeback rights for the transaction, as well as incorrect interchange if the transaction qualified for interchange. Data Integrity authorization edit to identify Issuers that decline merchant-only authenticated transactions with a valid Accountholder Authentication Value (AAV), but approve merchant-only authentication transactions without an AAV. - Some issuers have not updated their logic, as they are currently declining merchant-only transactions that contain the AAV value, but approving transactions that do not contain the value. Data Integrity authorization edit to identify Issuers that decline merchant-only authenticated transactions, but fail to offer an authentication solution to their cardholders. - Issuers not familiar with 3DS or authentication, are more likely to decline merchant-only authenticated transactions at the time of authorization, which can result in a loss of revenue for merchants and brand impact to MasterCard and the Issuer Effective Date: May 1,

8 MasterCard Restricts Existing Global Wholesale Travel Interchange Program to Certain MCCs The Program: MasterCard s Global Wholesale Travel Interchange program is open to all merchants when an eligible Commercial Credit card is accepted. The Change: MasterCard will restrict this interchange program to the following travel and entertainment MCCs, & 4511 (Airlines) & 7512 (Auto Rental) & 7011 (Hotels) 4112 (Passenger Railway) 4131 (Bus Lines) 4411 (Cruise Lines) 4582 (Airports, Airport Terminals, Flying Fields) 4722 (Travel Agencies and Tour Operators) 5962 (Direct Marketing Travel-Related Arrangement Services) 6513 (Real Estate Agents and Managers Rentals) 7032 (Recreational and Sporting Camps) 7033 (Campgrounds and Trailer Parks) 7012 (Timeshares) 7298 (Health and Beauty Spas) 7513 (Truck Rental) 7519 (Motor Home Rentals) 7991 (Tourist Attractions and Exhibits) 7997 (Clubs Country Clubs, Membership [Athletic, Recreation, Sports], Private Golf Courses) 7999 (Recreation Services not elsewhere classified) The Impact: Merchants currently qualifying for this interchange program and are not under one of the defined MCCs will see a shift in interchange to an existing Commercial Credit interchange program (i.e. Data Rate I). 8

9 MasterCard Revises Standards for Processing Authorizations and Preauthorizations Reminder The Program: As previously communicated in the Fall 2015 newsletter, MasterCard is introducing a number of authorization processing changes that include: new methods to identify the type of authorization, changes to authorization reversal timeframes, discontinuance of the 15/20 percent transaction amount tolerance for T&E and gratuities, changes to chargeback timeframes and the extension of incremental authorizations for all merchant types. The Change: These revisions will help Issuers effectively manage cardholders open to buy and chargeback protection maximum timeframe limits, based on authorization types. As a result, MasterCard is also implementing Data Integrity edits and a Processing Integrity Program to ensure the authorization changes are being adhered to. The authorization and processing changes are outlined in the tables below: All Regions (Excludes Europe) Support of Revised Standards for Processing Authorizations and Preauthorizations These changes are NOT applicable to: Automated Fuel Dispenser (AFD) MCC 5542 Contactless transactions Transit aggregated or debt recovery transactions Pre-authorizations or authorizations with expired chargeback protection timeframe Private label and non-mastercard branded transactions Offline approved transactions MasterCard Authorization Types Pre-Authorization: Authorization amount greater than zero, final authorization amount is unknown (e.g., hotel, car rental, e-commerce, MO/TO, restaurants). Original authorization amount may be adjusted when the final transaction amount is greater than the original authorized amount. Chargeback protection: 30 days (calculated from latest authorization date) Final Authorization: Authorization amount greater than zero, final transaction amount is known (e.g., card present, retail). The approved amount cannot be cancelled. The transaction must submit the sale for the transaction approved as the final auth. Chargeback protection: 7 days (calculated from authorization date) Undefined Authorization: Authorization amount is greater than zero; the final transaction amount may be different from the authorized amount. The approved amount cannot be cancelled after the authorization request is approved in full. Chargeback protection: 7 days (calculated from authorization date) Note: Undefined authorization is not a go-forward authorization type. MasterCard plans to have merchants and acquirers move from undefined to either preauthorization or final authorization types. Incremental Authorization: Authorization amount may be zero or greater than zero. When submitted as zero, it extends the original authorization timeframe for chargeback protection. It can be also used to initiate multiple pre-authorizations for the same transaction to increase the authorized amount and to extend the chargeback protection timeframe, or to only extend the chargeback protection amount when the incremental authorization is submitted with a zero dollar amount. 9

10 Authorization Changes Description Current Effective October 14, 2016 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) Chargeback Protection Timeframes 24 hours- Card present (non- T&E) 72 hours- Card-not-present (non-t&e) 20 days- T&E Transaction must be cleared within 120 days of the authorization data Note: Issuers may hold cardholder funds 7 to 30 days from the authorization date or when clearing is received. Transaction date to settlement date 7 days 24 hours- Card present and card-not-present A partial reversal will not be required if the transaction is submitting for clearing to MasterCard within 24 hours of finalizing the transaction and the transaction amount is lower than the authorization amount Authorization date to clearing date 30 days- Pre-authorizations Reason Code 4808 (Authorization-Related Chargeback) 15/20 Transaction Amount Tolerances Currently, no limit between the authorization date and transaction date Authorization to clearing amount 15% Hotel/Motel Vehicle Rental Cruise Lines Related Repair 20% for gratuities Chip/PIN Contactless Card present Card-not-present If the final transaction amount doesn t exceed the approved amount by the associated %, the merchant is not required to obtain an additional authorization. 7 days- All other MasterCard Authorizations Gratuity must be added directly in the authorization amount Tolerance for incidentals and gratuities is still available to card present transactions that are not chip/pin or contactless when the transaction is coded as a preauthorization or undefined authorization 10

11 Incremental (Multiple) Authorizations (Car Rental Agencies) 4411 (Cruise Lines) (Hotels/Motels/Resorts) 7011 (Hotels/Motels/Resortsnot 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. The 30 day chargeback protection timeframe is calculated from the date of the last approved authorization. Exclusions: 7512 (Automobile Rental MasterCard Contactless transit Agency-not elsewhere aggregated or debt recovery classified) transaction Installment billing payment transactions identified as preauthorization New Authorization Data Integrity Edits and Monitoring Programs MasterCard is introducing two new Data Integrity edits to monitor support of undefined authorizations and preauthorizations. Preauthorization Monitoring and Fee Assessment January 1, 2017: Monitoring begins for preauthorization compliance January 1, 2017: Non-compliance reporting for Preauthorization produced and distributed by MasterCard for authorization volume over 25% June1, 2017: Fees for non-compliance may begin to be assessed Undefined Monitoring and Fee Assessment January 1, 2017: Monitoring begins for undefined authorization compliance January 1, 2017: Non-compliance reporting for Undefined produced and distributed by MasterCard Jan 1, 2017-June 1, 2017: Resolution time period June 1, 2017: Non-compliance fees may be assessed for authorization volume over 50% June1, 2018: Non-compliance fees may be assessed for authorization volume over 20% *NEW Authorization Not Reversed or Cleared June November 2016: Monitoring and reporting November 2016: Fees for non-compliance may begin to be assessed Criteria - A new fee will be assessed for each approved authorization that is: Not reversed based on the following timeframes: 30 calendar days of authorization date-preauthorizations 7 calendar days of the authorization date-undefined Not cleared based on the following timeframe: 120 calendar days of authorization for preauthorizations and undefined authorizations Note: This will replace the current Processing Integrity Fees for Late Reversals and No Clearing within 120 days of authorization. 11

12 Final Authorization June June 2017: Monitoring and reporting June 2017: Fees for non-compliance may begin to be assessed Criteria- A fee will be assessed for each approved authorization when: Less than 1% of final authorizations were reversed or not cleared Transaction not cleared within 7 calendar days of authorization date MasterCard Revised Standards for Processing Authorization Reversals The Program: MasterCard is introducing authorization processing changes that include updates to authorization reversal timeframes. MasterCard has identified that the submission of reversals for which there are no preceding linked authorization requests is an indicator of a potential fraud scheme. The Change: These revisions will help Issuers effectively manage cardholders open to buy and chargeback protection maximum timeframe limits, based on authorization types. The Impact: MasterCard is mandating each reversal request message submitted that originates from a merchant corresponds to an original issuer-approved authorization request message. MasterCard is providing an update to its best practices for the management of authorization reversals. The following is provided as guidance for reversal processing. NOTE: Unless otherwise specified, these are best practices and are not mandatory: Authorization reversal messages are intended to fully or partially release a hold of funds prior to clearing the transaction. MasterCard recommends that merchants submit reversals as soon as an adjustment to the original authorization amount is known. Only approved authorization requests or transactions that have timed out are required to be reversed. o Effective October 14, 2016, merchants and acquirers must submit a full or partial reversal (as applicable) within 7 calendar days of an original authorization or final authorization request and within 30 calendar days of an original pre-authorization request. o Effective October 14, 2016, merchants and acquirers must submit a full or partial reversal within 24 hours of transaction cancellation or of the transaction completing for an amount different from the authorized amount. 12

13 MasterCard Updates Eligibility Requirements for the Retail and Supermarket Consumer Debit and Prepaid Tiers Program The Change: MasterCard is updating the eligibility requirements for retail and supermarket consumer debit and prepaid tiered interchange programs as outlined below: Minimum Annual Consumer Debit & Prepaid Merit III & Supermarket Volume Tier Current Effective April 15, USD 400 million USD 400 million 2 USD 275 million USD 275 million 3 USD 150 million USD 175 million The minimum annual Consumer Debit and Prepaid volume is based on a merchant s October September 2015 unregulated volume settled through GCMS that qualified for the Merit III or Supermarket interchange programs and requires a MasterCard approved and assigned Merchant ID. Only retail and restaurant MCCs may qualify for Merit III tier 1, 2, or 3 MasterCard Eliminates PIN Debit Tier Rate Programs The Change: MasterCard has made the decision to eliminate their PIN Debit Tier Rate Programs. The Impact: Transactions that are currently qualifying for the PIN Debit Tiered Rate Programs will begin to qualify at the base PIN Debit rates. U.S. Region MasterCard PIN Debit Rates Interchange Program PIN Debit All Other Base PIN Debit All Other Tier 1 PIN Debit All Other Tier 2 PIN Debit Convenience Base PIN Debit Convenience Tier 1 PIN Debit Convenience Tier 2 PIN Debit Supermarket/Warehouse Base PIN Debit Supermarket/Warehouse Tier 1 PIN Debit Supermarket/Warehouse Tier 2 13

14 MasterCard Modifies Asia Pacific Intraregional Interchange Fee Program Rates The Program: MasterCard will change existing interchange fee program rates applicable to Asia Pacific Intraregional consumer and commercial credit and debit card transactions. The Change: The rates for the following interchange categories will be updated and reflected on merchants invoices. Interchange Fee Program Consumer World Commercial Standard Commerical Purchasing Standard Electronic Card Commercial Commercial World/World Elite Standard MasterCard Modifies Asia Pacific Intraregional Interchange Qualification Programs The Program: MasterCard is modifying the interchange qualification for Gold Debit MasterCard cards in the Asia Pacific Region. Currently, Gold Debit MasterCard cards qualify for Intraregional Consumer Standard interchange programs. The Change: Gold Debit MasterCard transactions may now qualify for Intraregional Consumer Gold interchange programs. All other Debit MasterCard card transactions will continue to qualify as they are today. Current Interchange Program Effective April 15, 2016 Standard (Mo/To & AFD) Consumer Gold (Mo/To & AFD) Standard (Non-Mo/To & Non-AFD) Consumer Gold (Non-Mo/To & Non-AFD) The Impact: Automated Fuel Dispenser and non Mo/To merchants will realize a shift in interchange programs for Gold Debit MasterCard transactions. MasterCard Assessment Fee Increase The Program: MasterCard periodically reviews and evaluates their fee structures in an effort to accommodate system enhancements and improvements. As a result, MasterCard will increase their Assessment fee. The fee will continue to be assessed based on gross MasterCard sales volume. The Change: MasterCard will increase the assessment for consumer and commercial credit transactions of $1000 or over. The Change: Merchants will see a change in the fee amount listed for the Vantiv billing description: MC ASSESSMENT FEE $1000 & OVER on their invoice. 14

15 MasterCard Global Acquirer Program Support Fees The Program: Currently MasterCard passes back the fee for return transactions as part of their Global Acquirer Program. Upon review of the current program structure, MasterCard has made the decision to change the program s support fees. The Change: MasterCard is revising the Global Acquirer Program Support Fees and will no longer pass the fee back for return transactions. The Impact: The current fee, assessed on Net Volume, will be changing to Gross Volume, resulting in less credits and a potential increase in fees. The Vantiv billing description for this fee is MC ACQ POS PROGRAM SUPPORT. MasterCard Introduces New SecureCode Fees The Program: MasterCard periodically reviews and evaluates their fee structures in an effort to accommodate program improvements and system enhancements. As a result, MasterCard will be implementing a new fee for MasterCard SecureCode transactions. The Change: MasterCard is introducing a new fee for the following MasterCard SecureCode transactions: Merchant UCAF (Merchant-only) o Cardholder authentication attempted by merchant using 3D Secure, however the Issuer or cardholder did not participate) Full UCAF (Fully Authenticated) o Merchant, Issuer, and cardholder participated and the cardholder was authenticated. The Impact: SecureCode merchants will recognize the new fee on their invoice with a description of MC SECURECODE FEE. MasterCard Introduces New Chargeback Blocking Service The Program: MasterCard chargeback rules prohibit Issuers from using a fraud reason code to charge back a transaction if the Issuer approved the transaction after having done a previous fraud chargeback or if the Issuer has already processed 25 fraud chargebacks on that card number. MasterCard tracks the chargebacks through its Fraud Notification Service (FNS) and reports the information to the acquirer. This rule applies to chargeback reason codes 4837, 4870, and The Change: MasterCard will provide a new service that automatically blocks chargebacks that are ineligible because of Fraud Notification Service (FNS) criteria. This will replace the system logic that Vantiv implemented four years ago to automatically represent these chargebacks. The Impact: Because these chargebacks will no longer be transmitted to Vantiv, merchants may see a small decline in the number of fraud chargebacks for the reason codes listed above. 15

16 MasterCard Revises Chargeback Standards and Provides Second Presentment Clarification for Imprinted Sales Slip The Program: In a continuing effort to simplify and clarify the Chargeback Guide, MasterCard is announcing the collapse and reorganization of several chargeback reason codes. The Change: MasterCard is combining the errors in processing chargebacks message reason codes below, under the single chargeback message reason code 4834, which is being renamed to Point of Interaction Error (Transaction Amount Differs) 4834 (Duplicate Processing) 4842 (Late Presentment) 4846 (Correct Transaction Currency Code Not Provided) Issuers may use reason code 4834 for any of the processing errors. Merchants should refer to the Message In field or the cardholder/issuer documentation before responding to the chargeback. MasterCard is also clarifying the second presentment condition for reason code 4837 chargeback to indicate that: A manually imprinted and signed sales slip will only be considered as a final remedy when the authorization properly and consistently identified the transaction as face-to-face. The authorization may not contain conflicting information. MasterCard Eliminates Chargeback Message Reason Code 4802 The Program: MasterCard has determined that chargeback reason code 4802 (Requested Item Missing/Illegible) provided limited value and has been used improperly, such as when a fraud-related code was available or no financial loss occurred. The Change: Issuers are encouraged to use a chargeback reason code that directly relates to the cardholder s dispute rather than focus on the sales receipt itself. The Impact: If an Issuer believes that documentation provided by a merchant at the retrieval stage is illegible or missing required elements, they must ask MasterCard for an Image Review. If MasterCard agrees with the Issuer, the Issuer must file a compliance case against the merchant. 16

17 Visa UPDATE Visa Contactless Acceptance Requirements Reminders Update: Visa has stated that in light of the limited availability of EMV-based qvsdc contactless solutions for the U.S. market, until further notice, Visa will defer the following EMV contactless acceptance requirements previously announced. The Program: As previously communicated in the Winter 2016 newsletter, with the implementation of EMV, Visa will begin using EMV functionality in order to process contactless transactions. The Change: In order to support EMV contactless transactions, readers must be capable of and configured to the VCPS specification, transmitting full chip data to Visa. Transactions must be processed as EMV contactless transactions when the device or card supports both EMV contactless and MSD contactless formats. The Impact: Visa has set a sunset date for Magnetic Stripe Data (MSD)-only terminals that do not meet the Visa Contactless EMV Payment Specifications (VCPS) *The Timing: The dates and requirements are outlined below: Terminals deployed on or after January 1, 2015 must comply with the VCPS (or higher), and be capable of processing a transaction using the qvsdc transaction path (though the terminal may actively support only the MSD transaction path). [*deferred until further notice] Effective April 1, 2016, all contactless terminals in the U.S. must comply with the VCPS (or higher) and be capable of supporting contactless chip (qvsdc) functionality. Any terminals that do not meet this requirement must be removed. [*deferred until further notice] Effective April 1, 2016, merchant locations that actively support EMV contact chip and accept Visa paywave transactions must actively support qvsdc transaction processing for their contactless transactions. 17

18 Visa Discontinues Key-Entered Transaction Requirements at the Point-of-Sale for EMV Chip Accepting Merchants The Change: Visa will no longer require EMV chip accepting merchants terminal products to support manual key-entry of transactions. Manual key-entry support by EMV chip accepting merchants will be optional and at the merchant s discretion. The Impact: Merchants will not be required to key-enter payment products that cannot be read (magnetic stripe, contactless, contact) by the terminal device at the point-of-sale. EMV-enabled merchants supporting both EMV chip (contact and/or contactless) and magnetic stripe reading will not be required to support manual key-entry of card numbers Merchants that do not have EMV chip-enabled terminal products must continue to support key-entered transactions. The Date: April 22, 2017 Visa Prohibits Card Verification Value 2 (CVV2) in Authorization of Card-Present Transactions The Change: Merchants will be prohibited to request a cardholder provide their Card Verification Value 2 (CVV2) for a card-present transaction. The Impact: Card-present transactions cannot contain a CVV2 value in the authorization request. As a result, CVV2 in lieu of imprint will no longer be supported for chargeback Reason Code 81. At this time there are no plans to add systemic edits for CVV2 on card-present transactions. Normally, Visa does not employ authorization edits that may have a negative impact on cardholders at the time of purchase. However, Visa will likely monitor to identify any violations and will enforce Visa Rules through the compliance process if required. The Date: April 22, 2017 Visa s New POS Graphic Guide Includes Correct Use of EMVCo Contactless Marks The Program: Visa published the Visa Point-of-Sale Graphic Application and Reproduction Guide to communicate the proper usage of the Visa Brand including POS graphics. Standard use of the POS graphics is important to ensure cardholders know where and how to use their Visa payment products. The Change: Merchants that display the Visa POS graphic must display the correct EMVCo contactless symbol on the POS devices that are enabled with near field communication (NFC) technology and must follow Visa product brand standards. The Impact: Non-compliance assessments may be leveraged for merchants that fail to properly use the Visa POS Graphic or EMVCo Contactless Symbol. 18

19 Visa Updates Consumer Credit Performance Threshold Interchange Programs The Program: Visa is updating the eligibility requirements for the retail and supermarket consumer credit performance threshold interchange program as outlined below: Performance Thresholds (Consumer Credit) Minimum Transaction Count Payment Volume Minimum Current 1 New 2 Current 1 New 2 1Eligibility requirements are based on activity from the 12 months ending 30 September Eligibility requirements are based on activity from the 12 months ending 30 September Chargeback ratios are calculated as a percentage of a merchant s gross transaction count. Maximum Chargeback Ratio 3 (unchanged) PCI Compliance (unchanged) Threshold I 67 million 75 million $4.2 billion $4.6 billion 0.020% Required Threshold II 41.4 million 46 million $2.2 billion $2.6 billion 0.020% Required Threshold III 10.3 million 12 million $565 million $670 million 0.020% Required Visa Elimination of Referral Response Codes Reminder The Program: As previously communicated in the Fall 2015 newsletter, a referral response code informs a merchant to contact the card issuer at the point-of-sale. The issuer is to provide the merchant with instructions (e.g., validate that the cardholder is at actual location) before proceeding with the sale. This process is antiquated and does not promote speed at the point-of-sale, nor does it generate a positive cardholder experience. In most cases, acquirers and merchants will auto-decline a referral response and ask the cardholder for another form of payment. The Change: Visa will no longer permits issuers to respond to an authorization request with a referral response code. The Impact: The following authorization response codes will be eliminated: Refer to card issuer Refer to card issuer special condition If an issuer continues to send referral response codes after April 2016, Visa will review the authorization requests and will either approve or decline the authorization based on the issuer s authorization parameters. 19

20 Visa Updates Rules for Unattended Terminals and Easy Payment Service (U.S., AP, Canada, CEMEA, LAC) The Program: Currently, Unatted Cardholder Activated Transactions (UCAT) transactions that are $15 or less qualify for the VEPS. The Change: Visa will begin to permit all unattended cardholder activated transactions (UCAT), with the exception of the exclusion merchant and transaction types below, to be eligible for Visa Easy Payment Service (VEPS). Visa will also update chargeback reason code 81 (Fraud-Card-Present Environment, condition 3) stating that VEPS and UCAT online authorized chip transactions will be invalid. Excluded Merchant Types: Wire Transfer Money Orders Automated Fuel Direct Marketing 59** FI Merchandise and Services Betting, Lottery Tickets, Casino Gaming Chips, Online Gambling, Horse/Dog Racing Intra-Government and Company Purchases Excluded Transaction Types: Fallback transaction Account Funding Cash-Back Manual Cash Disbursement Quasi-Cash Prepaid Load Dynamic Currency Conversion was performed Easy Payment Service Transaction thresholds: $25 or less (mag stripe, chip) $50 or less (mag strip, chip) for Grocery Stores and Discount Stores Visa Updates Unattended Terminals (UCAT) Quasi-Cash Verification Requirements The Program: Visa currently requires merchants to obtain a secondary identification (e.g., driver s license) when performing a face-to-face transaction; however, it is not required for UCAT quasi-cash transactions. The Change: Visa will begin to request a PIN or consumer device CVM for all UCAT quasi-cash transactions. Unattend Cardholder Activated Terminals (UCAT) Floor Limits Moved to Zero The Program: Visa will move all Visa Inc. countries to a zero floor limit for UCAT transactions, excluding Hong Kong and Japan. 20

21 Visa ReducesTransaction Processing and Late Presentment Time Frames The Program: Currently, when calculating Visa transaction processing timeframes it can be based on calendar days, business days or local business days. The Change: Visa is aligning most of their references across regions to indicate that when calculating transaction processing timeframes, it should be based on calendar days. Visa is also changing the transaction processing timeframes (transaction date to clearing date) in the U.S., Canada, AP, LAC and CEMEA Regions. The Impact: The new transaction processing timeframes will be based on transaction type and will consolidate transaction types into three groups. Visa will also update the Late Presentment chargeback (Reason Code 74) timeframes to align with the new transaction processing timeframes.transactions that are not submitted within the established time frames may be subject to late presentment chargebacks when the cardholder account number is not in good standing (e.g., counterfeit, account closed, fraud). CPS interchange qualification timeframes or the Processing Integrity timeframes will not change. Transaction Type Transaction Processing Timeframes U.S. Region Current Effective April 15, 2016 Visa Electron and ATM Electron- Within 3 local business days from transaction date ATM- Must be SMS processed transaction Electron- Within 5 calendar days of the transaction date ATM- Must be SMS processed transaction Visa Readylink Must be SMS processed transaction Must be SMS processed transaction All Other Transactions In-Transit- Within 5 calendar days of the transaction date Preauthorized Healthcare- Within 90 calendar days of the service date Purchase- All except centrally processed multiple merchant outlets (e.g. transportation companies federally/foreign regulated, oil companies, car rental, lodging, restaurant changes)- Within 10 calendar days of the transaction date Purchase- Centrally processed multiple merchant outlets- Within 20 calendar days of the transaction date Merchandise Return/Credit- All except centrally processed multiple merchant outlets (e.g. transportation companies federally/foreign regulated, oil companies, car rental, lodging, restaurant changes)- Within 5 calendar days of the transaction date Merchandise Return/Credit- Centrally processed multiple merchant outlets- Within 10 calendar days of the transaction date Within 8 calendar days of the transaction date Merchandise Returns/Credits- U.S. Region Domestic- Within 5 calendar days of the transaction date Interregional- Within 8 calendar days of the transaction date 21

22 Transaction Type Visa Electron and ATM Transaction Processing Timeframes AP, Canada, LAC Regions Current Effective April 15, 2016 Electron- Within 3 local business days of the transaction date ATM- Within 3 calendar days of the transaction date (excludes transaction date, processing date, and Sundays) Electron- Within 5 calendar days of the transaction date ATM- Must be SMS processed transaction Visa Prepaid Load Service All Other Transactions Within 2 calendar days of the load service date In-Transit- Within 5 calendar days of the transaction date Purchase- All except centrally processed multiple merchant outlets (e.g. transportation companies federally/foreign regulated, oil companies, car rental, lodging, restaurant changes)- Within 15 calendar days of the transaction date AP Region- within 8 business days of the transaction date, (excluding Electron) includes transaction date and processing date. Purchase- Centrally processed multiple merchant outlets- Within 30 calendar days of the transaction date AP Region- within 8 business days of the transaction date, (excluding Electron) includes transaction date and processing date. Merchandise Return/Credit- All except centrally processed multiple merchant outlets (e.g. transportation companies federally/foreign regulated, oil companies, car rental, lodging, restaurant changes)- Within 15 calendar days of the transaction date AP Region- within 8 business days of the transaction date, (excluding Electron) includes transaction date and processing date. Merchandise Return/Credit- Centrally processed multiple merchant outlets- Within 30 calendar days of the transaction date AP Region- within 8 business days of the transaction date, (excluding Electron) includes transaction date and processing date. Within 2 calendar days of the transaction date Within 8 calendar days of the transaction date Merchandise Returns/Credits- - Within 8 calendar days of the transaction date 22

23 Visa Modifies BASE II Fees The Program: Visa periodically reviews and evaluates their fee structures in an effort to accommodate system enhancements and improvements. As a result, Visa will be decreasing their current Visa Base II Fee. The Change: The fee will continue to be assessed to merchants based on settled transactions (sales and returns). The Impact: Merchants may realize a decrease on their invoice for the Visa Base II Fees. Visa Introduces Acquiring Processing Fees (APF) on Returns The Program: Currently Visa assesses the Acquirer Processing Fees on authorizations only. The Change: Visa will begin to charge a new settlement fee for credit voucher (credit / refund / return) transactions. The new fee will be assessed to merchants on a per credit return transaction basis for credit, debit, and prepaid products. The Impact: Merchants will begin to see the new fees on their invoice with the Vantiv billing description of VISA APF SIG CREDIT RETURNS and VISA APF SIG DEBIT RETURNS. Discover Discover Increases Processing Fees The Program: Discover periodically reviews and evaluates their fee structures in an effort to accommodate system enhancements and program improvements. The Change: Discover will increase the following fees: Assessment Fee, Data Usage Fee, International Processing Fee and the International Service Fee. The Impact: Merchants may realize an increase on their invoice for various Discover fee programs. The International Processing and International Service fees are both billed when a merchant accepts a non-us issued card. The Data Usage and Assessment fees will continue to be assessed to merchants based on settled sales transactions. 23

24 American Express American Express OptBlue Announces New Small Ticket Fee Program The Program: American Express OptBlue has introduced a small ticket program for transactions that are $5.00 and below. The Change: This new small ticket program will be available to the following merchant types: Caterers MCC 5811 Bar Nightclubs MCC 5813 Restaurants MCC 5812 Fast Food Restaurants MCC 5814 The Impact: Eligible merchants will see the new interchange program rates on their billing invoice for these small ticket transactions. 24