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Interchange Release Information

The 2013 Spring Release summary is a compilation of documents received from American Express®, Discover®, MasterCard®, Visa® and the Debit Networks. This summary is presented for the convenience of the reader on the Cut Merchant Fees website and should not be used as a substitute for reference to the actual payment card brand releases, rules, and other official documents whenever necessary. Cut Merchant Fees shall not be responsible for any inaccurate or incomplete information. The information contained herein is subject to change.

General Interchange Message (1)
The Card Organizations periodically review their interchange rate programs, modifying them as they deem appropriate. This is to advise you that the payment card brands have recently announced modifications to many of their interchange rates. Effective April 19, 2013, rates and qualification criteria for certain categories of Visa, MasterCard and/or Discover interchange are being changed, including certain categories of downgraded transactions. You may notice changes in your rates and in your relative qualification percentages as we implement these changes. Please review your merchant statement carefully to make certain you are aware of any changes.

MasterCard Revised Travel and Entertainment Merchant Standards (2)
Effective October 18, 2012, MasterCard required each incremental authorization associated with a single cardholder transaction must reference the original authorization. The Network Data and Settlement Date from the original authorization response must be included in the Trace ID field. This change eliminates lengthy authorization holds held against the cardholder’s available credit (open to buy) and improve customer service related issues. With this change, MasterCard will expand the existing reversal mandate to include T&E merchant category codes effective October 18, 2013, which are currently excluded. The MasterCard Processing Integrity Fee (currently $0.055) will be applied to noncompliance transactions. Authorizations must be reversed within 20 days of the original authorization request. Action Required for T&E Merchants Processing Incremental Authorization Requests: Please contact your Point of Sale vendor to schedule the necessary software updates to ensure compliance with this mandate.

MasterCard Introduction of Small Business Spend Processing (3)
Effective July 18, 2013, MasterCard is introducing a 4 tier Small Business Spend Processing interchange structure in the U.S. Region. This new Small Business Spend Processing will incorporate existing business card rate programs, including the Business Enhanced Value card rate programs and add two additional business card rate program based on spend level requirements. MasterCard will leverage Account Level Management (ALM) processing to enable product migration across interchange levels and to help ensure that the interchange levels and interchange structure better reflects the value delivered to both issuers and merchants as measured by account spend. The following table depicts the spend requirements and the new and re-purposed interchange programs.

World MasterCard Spend Shortfall Calculation (4)
Effective April 19, 2013, MasterCard will implement the same procedures and systematic processes put in place on World Elite MasterCard cards in 2011 for World MasterCard cards. World MasterCard card portfolios are required to achieve $10,000 average spend across all of an issuers World MasterCard card portfolios combined. MasterCard will conduct an annual evaluation each December and redirect any World MasterCard account that is not meeting the required $10,000 spend level from World MasterCard interchange to one of the applicable Enhanced Value interchange programs for a period of 12 months until re-evaluated again. As a result, you may notice an interchange shift on specific World MasterCard cards you currently accept.

MasterCard Revised Acquirer Program Support Fee (5)
Effective March 31, 2013 for daily billing beginning April 1, 2013, MasterCard will increase the Acquirer Program Support Fee from 0.55% to 0.85%. The Acquirer Program Support Fee is assessed to acquirers on all U.S. region-acquired dollar volume that is generated by cards issued outside the U.S. region. This change includes both MasterCard and Maestro PIN debit card products. As a result, you will see an increase with any MasterCard inter-regional transactions.

MasterCard Authorization Data Accuracy Initiative Card Acceptor Terminal ID Compliance (6)
REMINDER NOTICE: On April 19, 2013, MasterCard is scheduled to enforce the requirement that all card present transactions contain a unique terminal identifier when a merchant location has multiple POS devices. Due to the complexity that this requirement may have for merchants, First Data has requested and received an extension from MasterCard. Merchants on a First Data front end authorization platform must comply with this requirement no later than December 1, 2014. Failure to comply may result in non-compliance fines in excess of $15,000.00. Action required for all card present merchants: If your business has multiple POS devices in a single location and you are not compliant with this requirement, please work with your vendor to obtain a unique terminal ID for each POS device used.

Disputes – MasterCard Revised Standards for CVC2 Validation Program (7)
Effective April 20, 2013, all U.S. region card present merchants will be able to participate in MasterCard’s CVC2 Validation Program which allows merchants to include the Card Validation Code 2 (CVC2) in the authorization request for key-entered transactions when an electronic swipe of the card is not able to be obtained. This will replace the need for a manual imprint of the card. All merchants who participate that meet all the following transaction qualifications will receive fraud protection under chargeback reason code 37. The merchant must be in the U.S. region, card present with magnetic strip failure only, key-entered transaction, CVC2 included in the authorization request with a value of “M”, and it must be an approved authorization. As a reminder, merchants should respond to all retrieval and chargeback requests to preserve their representment rights.

Disputes – MasterCard Revised Standards for Issuer and Acquirer Handling of Fraudulent Accounts (8)
Effective April 20, 2013, MasterCard will be revising the standards for Issuer and Acquirer handling of fraudulent accounts. MasterCard will provide the acquirer with a new chargeback representment right when the issuer initiates more than 35 fraud-related chargebacks on the same account number. Any fraud related chargeback reason code received containing a value exceeding 35 in the Fraud Notification Service Counter will be represented to the issuer as an invalid chargeback. Applicable fraud related chargeback codes are as follows: 37-No Cardholder Authorization, 47-Requested/Required Authorization Not Obtained and Fraudulent Transaction, 57-Card-Activated Telephone Transaction (Fraud Only), 62-Counterfeit Transaction Magnetic Stripe POS Fraud, 63-Cardholder Does Not Recognize Potential Fraud (Arbitration Chargeback Only RS2 and RS3), 70-Chip Liability Shift, and 71-Chip/Pin Liability Shift.

Disputes – MasterCard Revised Chargeback Standards (Additional Documentation for Arbitration) (9)
Effective April 20, 2013, MasterCard will allow additional documentation from the merchant in an arbitration case filing to address any progressive documentation that was supplied by the cardholder. Currently MasterCard does not review any documentation supplied by the merchant that was not included in the first chargeback representment unless the issuer has changed the reason code of the second chargeback.

Disputes – MasterCard Revised Chargeback Standards (Sales Draft Retention) (10)
Effective April 20, 2013, MasterCard will reduce the timeframe to retain sales drafts from 18 months to 13 months. Issuers may continue to request a copy of the sales draft older than 13 months; however, the acquirer is not required to fulfill those requests. This change does not affect the 5 year retention requirement for healthcare IRS audits applicable to FSA/HRA card types.

Disputes – MasterCard Revised Chargeback Standards (Additional Documentation for Reason Codes) (11)
Effective for chargebacks processed on or after October 19, 2013, Issuers will no longer be required to provide additional documentation to support the first chargeback for reason codes 31-Transaction Amount Differs, 40-Fraudulent Processing of Transactions, 46-Correct Transaction Currency Not Provided, 53-Defective/Not as Described, 54-Cardholder Dispute Not Elsewhere Classified, 59-Addendum, No-Show, or ATM Dispute, and 60-Credit Not Processed. Issuers are strongly advised to obtain documentation from the cardholder to support the dispute, as it will be required to pursue a second chargeback if cardholder documentation contradicts the merchant documentation or the acquirer first chargeback representment was invalid.

Disputes – MasterCard Revised Chargeback Standards (Goods are returned or services cancelled) (12)
Effective for first chargebacks processed on or after October 19, 2013, Issuers must wait 15 days after goods are returned or services cancelled before processing a chargeback for reason code 60-Credit Not Processed or 53-Defective/Not as Described.

Disputes – MasterCard Revised Chargeback Standards (Reason Code 60) (13)
Effective for transactions processed on or after October 19, 2013, MasterCard will be making changes to their return policy for reason code 60-Credit Not Processed. Merchants that are unwilling to accept buyer’s remorse returns and cancellations or specify special terms including (but not limited to) restocking fees or in-store credits, must disclose these terms at the time of the sale. The cardholder must be informed of the merchants refund policy prior to the completion of the sale at the point of interaction. Failure to disclose a refund policy will result in the merchant’s requirement to accept the goods for return and issue a credit to the cardholders account.

Disputes – MasterCard Revised Chargeback Standards (Electronic Agreement) (14)
Effective for transactions processed on or after October 19, 2013, when a cardholder engages in an e-commerce transaction and accepts the terms and conditions electronically the merchant will be able to utilize this acceptance in non-fraud disputes to show proper disclosure of a refund policy that was agreed upon by the cardholder. An electronic agreement of terms and conditions are not considered “compelling evidence” in fraud related cases. Note: Merchants are not allowed to utilize general terms and conditions to enroll a cardholder in recurring transactions. Any terms and conditions for recurring transactions must be clear and differentiated from general terms and conditions.

Disputes – MasterCard Revised Chargeback Standards (Timeshare Merchants) (15)
Effective for transactions processed on or after October 19, 2013, MasterCard will align rules globally for timeshares and timeshare-related transactions which will allow cardholders to cancel any contracts for timeshare or any similar provisions of service within 14 calendar days of signing the contract.

Disputes – MasterCard Revised Chargeback Standards for Reason Code 37 “No Cardholder Authorization” (16)
Effective October 18, 2013 MasterCard will consider the issuer’s dispute invalid for chargeback reason code 37 “No Cardholder Authorization” if the transactions was electronically captured (magnetically swiped, chip or contactless) at the point of sale. Issuers will maintain chargebacks rights for reason code 37 if the transaction was key entered, including transactions processed under the CVC2 (Card Validation Code)in lieu of Imprint Program, Card Not Present and occurred at unattended terminals. Please ensure that all retrieval and chargeback requests are fulfilled promptly to preserve chargeback rights.

Visa Processing Integrity Mandate for the Transaction Identifier (17)
Effective April 19, 2013, Visa will require the Transaction Identifier (TID) assigned by Visa during authorization to be included in the clearing and settlement messages. The requirement is to tie a successful authorization to a sales draft, a chargeback to a sales draft, or a representment to a chargeback. Action Required: Merchants should ensure they are sending the TID received from authorization in settlement. Settled transactions missing the required TID will downgrade to EIRF or the appropriate product standard interchange rate program.

Visa New Commercial Interchange Fee Programs for Prepaid Card Transactions (18)
Effective April 19, 2013, Visa will implement 3 new fee programs for commercial prepaid card transactions (Commercial Retail-Prepaid, Commercial Card Not Present-Prepaid and Commercial Standard-Prepaid) from non-regulated account ranges and no longer assess existing commercial credit interchange rates. These new commercial fee programs apply to both card present and card not present transactions. In addition to the aforementioned changes, Visa will allow quasi-cash transactions from Visa Business, Visa Corporate, and Visa Purchase prepaid cards to be eligible for selected CPS processing, including interchange fee assessment, authorization-related chargeback protection, and lifecycle control. The clearing transaction must contain the applicable CPS clearing data and meet CPS processing rules and fee edit criteria for one of the following card present programs: CPS/Retail, CPS/Supermarket, CPS/Restaurant, CPS/Retail Service Station, CPS/Passenger Transport Card Present, CPS/Hotel Card Present or CPS/Car Rental Card Present. Commercial prepaid transactions not meeting the CPS qualification or Limited Acceptance – Debit only merchant that accepts a commercial prepaid card will qualify for Commercial Standard-Prepaid. Level 2 and 3 data is not required for the new fee program or change to quasi-cash transactions.

Visa New Purchasing Large Ticket Program for Prepaid Transactions (19)
Effective April 19, 2013, Visa will implement a new fee program for Visa Purchasing Large Ticket prepaid card transactions that meet Purchasing Large Ticket qualifications and no longer assess the existing Purchase Large Ticket credit rate program to prepaid card transactions. Existing level 2 and 3 requirements apply and must be included to request the new fee program. Non-prepaid Purchase Large Ticket rates remain unchanged.

Visa New Utility Interchange Program for Visa Business Debit and Prepaid Card Transactions (20)
Effective April 19, 2013, Visa will implement a new utility fee program for eligible Visa Business Debit and Prepaid card transactions. To qualify for this new fee program, merchants must have MCC 4900 -Utilities, be registered in the Visa Utility program, contain the applicable CPS clearing data and meet CPS processing rules and fee edit criteria for one the following programs: CPS/e-Commerce Basic, CPS/e-Commerce Preferred or CPS/Card Not Present. Level 2 and 3 data is not required.

Disputes – Visa Elimination of Obsolete Chargeback and Request for Copy Reason Codes (21)
Effective April 20, 2013, Visa will be revising the International Operating Regulations for retrievals and chargebacks as follows:

  • Retrieval reason code 29-Travel and Entertainment Document Request: This retrieval reason code will be eliminated. Issuers will no longer be permitted to utilize this reason code when requesting a copy of a transaction document for travel and entertainment. Issuers may still utilize one of the remaining retrieval reason codes that best describes the nature of the request. Reason Code 30-Services Not Provided or Merchandise Not Received: Issuers will be required to provide a detailed description of the goods or services purchased by the cardholder within the chargeback documentation, unless prohibited by law.
  • Reason Code 75-Transaction Not Recognized: Issuers will no longer be required to list which transaction field(s) were not recognized by the cardholder when initiating a chargeback. However, this does not change what is required to be provided by the merchant to remedy the dispute.
  • Reason Code 81-Fraud Card-Present & 83-Fraud Card Not Present: Issuers will be required to list the account number on the Exception File with a pickup response for a minimum of 30 days and report as fraud if a transaction is processed with a fictitious account number for members within the Europe Region. Note: This requirement is currently in place for all other Visa regions.

Disputes – Visa Changes to U.S. Dispute Processing – Chargeback and Retrieval Request Revisions Made to Visa International Operating Regulations (22)
Effective April 19, 2013, Visa will be revising retrieval request requirements, chargeback rules and introducing a new retrieval
compliance right. Those changes are as follows:

  • Transaction Receipt Retrieval Requirement Elimination: Visa will no longer require the issuer to initiate a retrieval request prior to initiating a chargeback for reason codes 75-Transaction Not Recognized, 81-Fraud Card Present or 83-Fraud Card Not Present. The issuer may still initiate a request to obtain a copy of the transaction receipt if it is required by local law, legal proceeding, law enforcement investigation or a cardholder escalation request, but not as a condition of the chargeback. Visa will allow the issuer to pursue a compliance case if the merchant fails to respond to the retrieval request or the transaction receipt does not contain a signature. Merchants who fail to respond to the compliance case could be liable for the transaction.
  • Chargeback Rule Modifications: Visa will consider transactions that were electronically captured at the point of sale invalid for chargeback reason codes 75-Transaction Not Recognized, 81-Fraud Card Present or 83-Fraud Card Not Present. The issuer will maintain chargeback rights if the transaction was key-entered or occurred at an unattended terminal. However, they must still meet all the predefined conditions of the chargeback reason code to initiate the dispute

Dispute – Visa New Representment Right for Compelling Evidence (23)
Effective April 19, 2013, Visa will be updating their International Operating Regulations to clarify as well as add additional types of compelling evidence that can be used during the dispute resolution process for reason codes 30-Services Not Provided or Merchandise Not Received, 53-Not as Described or Defective Merchandise, 81-Fraud Card Present & 83-Fraud Card Not Present. The following table depicts the compelling evidence by reason code. Note: Compelling evidence does not mandate, as a matter of fact or law, that the cardholder participated in, received goods or services, or benefited from the transaction. Merchants may see an increase in representments for the aforementioned reason codes. If compelling evidence is provided during the representment stage, issuers must not only contact the cardholder but must also provide certification of contact when initiating a pre-arbitration case. A pre-arbitration is required prior to filing an arbitration case with Visa. If the issuer fails to provide certification, they will receive an unfavorable arbitration ruling.

Chargeback Reason Code Allowable Compelling Evidence
30, 53, 81, 83 Evidence such as photographs or emails, to prove a link between the person receiving the merchandise and the cardholder, or to prove that the cardholder disputing the transaction is in possession of merchandise
30, 81, 83

For a Card Not Present transaction in which the merchandise is picked up at the merchant location, any of the following:

  • Cardholder Signature on the pick-up form
  • Copy of identification presented by the cardholder
  • Details of identification presented by the cardholder
  For a Card Not Present transaction in which the merchandise is delivered, documentation (evidence of delivery and time delivered) that the item was delivered to the same physical address for which the merchant received an AVS match of “Y” or “M”. A signature is not required as evidence of delivery.
 

For an ecommerce transaction which represents the sale of digital goods downloaded from a website, one or more of the following”

  • Purchaser’s IP address
  • Purchaser’s email address
  • Description of the goods downloaded
  • Date and time goods were downloaded
  • Proof that the merchant’s website was accessed for services after the transaction date
  For a transaction in which merchandise was delivered to a business address, evidence that the merchandise was delivered and that, at the time of delivery, the cardholder was an employee of the company at that address (i.e., confirmation that the cardholder was listed in the company directory or had an email address with the company’s domain name). A signature is not required as evidence of delivery.
  For a Mail/Phone Order transaction, a signed order form
81, 83

For a passenger transport transaction, any of the following:

  • Proof that the ticket was received at the cardholder’s billing address
  • Evidence that the boarding pass was scanned at the gate
  • Details of the frequent flyer miles claimed, including address and telephone number (that establish a link to the cardholder).
  • Evidence of additional transactions related to the original transaction, such as purchase of seat upgrades, payment for extra baggage, or purchases made on board the aircraft.
  For a card not present transaction, evidence that the transaction uses data, such as IP address, email address, physical address, and telephone number, that had been used in a previous, undisputed transaction.
  Evidence that the transaction was completed by a member of the cardholder’s household.

Partial Authorization Mandate for Acquirers (24)
Effective April 1, 2013, merchants that provide cash back at the point of sale for Interlink debit network transactions must support partial authorization processing. This capability will allow issuers to identify and properly respond to authorization requests by approving purchase amounts and decline cash back requests for certain prepaid programs that have cash access restrictions such as non-reloadable prepaid gift cards and healthcare programs.

New Interlink Commercial Card Fee Program for Non-regulated Prepaid Transactions (25)
Effective April 19, 2013, Visa will implement a new Interlink debit network fee program applicable to U.S. domestic Visa Business, Visa Corporate, and Visa Purchasing non-regulated prepaid card transactions from any valid MCC. There are no changes to existing Interlink fee programs that apply to consumer debit, consumer prepaid and Visa Business debit card transactions from regulated and non-regulated account ranges. The interchange rate for the new Interlink Commercial non-regulated prepaid transactions will be 2.15% + $0.10.

American Express OnePoint Updated Rates on Existing Programs (26)
IMPORTANT NOTICE: American Express will delay charging the Inbound Fee of 0.40% to Prepaid cards until October 18, 2013. American Express originally announced this change would take effect April 19, 2013. The Inbound Fee will continue to apply to all other card types excluding Prepaid cards, until the new effective date.

American Express one point MCC Changes/Reassignments MCC 7375 (27)
Effective April 19, 2013, American Express is moving Information Retrieval Services MCC 7375 from the Mail Order & Internet industry to the Services, Wholesale & All Other industry. As a result, the discount fee you pay will be changing from 3.50% for credit cards to 2.89% + $0.15 and for prepaid cards from 1.95% to 1.95% + $0.15 for transactions taken on or after the effective date.

American Express One Point MCC 4722 (28)
Effective April 19, 2013, American Express is moving Travel Agencies & Tour Operators MCC 4722 from the Services, Wholesale & All Other industry to its own Travel Agencies & Tour Operators industry. As a result, the discount fee you pay will be changing to 2.89% + $0.15 for credit cards and 1.95% + $0.00 for prepaid card transactions taken on or after the effective date.

Discover Full Acquiring – Separated Program Codes for Prepaid and Debit Transactions (29)
Effective April 19, 2013, Discover will add new interchange rate programs for non-regulated consumer prepaid card products. As a result, merchants may see a shift in cost from the existing non-regulated debit interchange fee structure to the new non-regulated consumer prepaid interchange fee structure.

Discover Full Acquiring – Operating Regulations Changes (30)
Effective April 19, 2013, Discover will implement the following changes to the Discover Acquirer Operating Regulations:

  • Automated Fuel Dispenser (AFD) merchants using MCC 5542 must submit an Authorization Advice Message for the final fuel purchase amount within 60 minutes of the gas being pumped. Action Required: Please contact your pump vendor immediately to ensure compliance with this mandate. Failure to comply with this mandate may result in non-compliance fines from Discover.
  • Discover is reducing a valid authorization response from 30 days to 10 days for all MCCs except for Travel & Entertainment (T&E) Industries. Sales from car rental, airline and passenger rail, lodging industries, and other passenger transport categories will remain valid for 30 days.
  • Discover is reducing the deadline for transmitting settled sales from 30 calendar days to 10 calendar days for all MCCs except Travel & Entertainment (T&E) Industries. Travel and Entertainment (T&E) Industries will remain 30 calendar days. Transactions submitted within the required timeframes will receive chargeback protection for reason code 4542 “Late Presentment”. Sales settled after the deadline will be subject to higher interchange rates, fees and/or disputes.
  • Discover is reducing the timeframe authorizations may be cancelled from 15 calendar days to 10 calendar days. If a card sale is cancelled or the amount of the card sale is altered once an authorization has been received, merchants must cancel (reverse) the authorization within the specified timeframe.

Disputes – Discover No Signature (31)
Effective for transactions processed on or after April 20, 2013, Discover will revise the transaction amount limits for the No Signature Program from $25.00 to $50.00 for all merchants participating in the program. To qualify the transaction must be card present, transaction amount $50.00 or less, electronically captured, and full authorization obtained. Transactions meeting the aforementioned requirements under the No Signature Program will qualify for chargeback protection under reason codes 4584/IS “Missing Signature” and 7010/UA01 “Fraud Card Present”. The No Signature Program is available for all MCCs except for 4829, 6010, 6011, 6050, 6051, 6531, 6532, 6533, 6534, or 7995.

Disputes – Discover Dispute Processing Changes (32)
Effective April 20, 2013, Discover will be revising the Dispute Regulations for chargebacks by further aligning dispute rules as follows:

  • 4750/AL “Airline Transaction Dispute” – Issuers will no longer be permitted to utilize this chargeback reason code to initiate a chargeback for airline disputes. The Issuer must utilize a reason code that best describes the nature of the cardholder’s dispute.
  • 4756/SV “Stored Value Dispute” – Issuers will no longer be permitted to utilize this chargeback reason code to initiate a chargeback for Prepaid Gift Cards when authorization was not obtained for the amount of the dispute. Issuers must utilize reason code AT “Authorization Non-Compliance” for transactions that did not obtain proper authorization and the Issuer is unable to collect the funds from the cardholder.
  • 4580/UA03 “Fraud Processing Error” – Issuers will no longer be permitted to utilize chargeback reason code 4580/UA03 to initiate a chargeback for transactions due to fraud and it was conducted in accordance with the Discover Operating Regulations. When initiating a chargeback for fraud they must utilize reason code 7010/UA01 “Fraud Card Present” or 7030/UA02 “Fraud Card Not Present”.

Disputes – Discover Reason Code 4762/05 (33)
Effective April 20, 2013, Discover will introduce chargeback reason code 4762/05 “Good Faith Investigation” to allow the Cardholder or Issuer to challenge the validity of a card transaction after the expiration of the standard dispute initiation timeframe. The Issuer may utilize reason code 4762/05 in the dispute process to debit the merchant that responds that it is willing to accept the Good Faith Investigation request. Merchants are not obligated to respond to Good Faith Investigation requests. By not responding, there is no financial impact to a merchant and Issuers are not entitled to any additional dispute rights.

Disputes – Discover Timeframes Modifications (34)
Effective April 20, 2013, Discover will modify timeframes for chargeback reason code 4755/RG “Non-Receipt of Goods or Services”. The timeframe for Issuers to initiate disputes will change from a maximum of two years from the processing date to within 540 calendar days from the processing date of the transaction.