There are over half a dozen documents for the April 2022 network changes. You could plow through all of them to understand how changes impact your operations, financial forecasting needs, and technical environment. While we’ll never know your merchant model as well as you do, you can think of us as your farmer’s almanac for growing payment processing success. And if you grow your knowledge, you can cultivate better outcomes. Let’s quickly recap the importance of these changes which we introduced in a previous blog:
Many of the upcoming changes are new to American Express processing but align with other card network processing concepts. Read through everything or skip to the sections most relevant to you business using the links below.
American Express announced requirements to address the use of credentials-on-file without direct participation from the cardmember effective October 14, 2022. The changes will add codes and formats needed to process and identify a merchant initiated transaction (MIT) in authorizations and submission and includes important details about cardholder consent and notifications.
Other card networks have already worked this crop of changes into their rotation yet many merchants may still be trying to figure out how to handle refunds when they are declined or charged back for no approval code. American Express is not making this mandatory—yet—but it’s likely given how this has grown into fees and chargeback losses where it already applied to Visa and Mastercard.
SafeKey is the American Express version of 3DS and is designed to help reduce fraud. The AESK program shifts the liability of a fraud chargeback to the issuer if the conditions of the program are met.
A new soft error message was announced in the Notification of Specification Changes (NOSC) April 2022 guide. On the surface, this is a pretty minor change and announcement, but it might grow into something you need to watch out for.
American Express is expanding their support to include marketplace sellers and installment payment providers, which is big news. They’re adding definitions to their glossaries, expanding submission records to include enhanced data, and modifying chargeback requirements.
American Express announced requirements to address the use of credentials-on-file without direct participation from the cardmember effective October 14, 2022. The changes will add codes and formats needed to process and identify a merchant initiated transaction (MIT) in authorizations and submission and includes important details about cardholder consent and notifications. New terminology will also be added to their glossary since this is a new concept for American Express:
Credentials-on-file are a great way to drive loyalty and reduce friction at checkout. When cards are stored, however, they pose a risk. A great way to reassure your customers, obtain required consent to store the card, reduce customer effort, and improve authorization success would be to use Toucan, our network tokenization service and/or Loon, our account updater service. When you ask the customer for consent to store their card, you can use that event to trigger one of these two Pagos services.
Other card networks have already worked this crop of changes into their rotation yet many merchants may still be trying to figure out how to handle refunds when they are declined or charged back for no approval code. American Express is not making this mandatory—yet—but it’s likely given how this has grown into fees and chargeback losses where it already applied to Visa and Mastercard.
The change is expected to ensure that by October 2022 merchants and processors are ready to handle the new authorization message calls. It’s being communicated as a means of improving customer awareness and reducing disputes. The announcement includes changes that will be included in the October Regulations that state “If you choose to support Authorization for Credit, you shall comply with the Authorization requirements as applicable.”
If you already have a process in place to deal with declined refunds on Visa and Mastercard, this should be an easy change to make any time after October or until it’s required. If you are not sure how you are handling things like declines or chargebacks on refunds or credits, this is one more reason to start minding your garden. (We’ll have a blog that digs deeper into this topic.)
SafeKey is the American Express version of 3DS and is designed to help reduce fraud. The AESK program shifts the liability of a fraud chargeback to the issuer if the conditions of the program are met. The criteria are calculated monthly, based on all charges as determined by American Express. The change is minor but will yield less fraud loss savings and may mean merchants need to prepare a response plan.
Today program eligibility requires either:
After October 14, 2022, the requirements will be to:
The change also adds the condition that, if at any time the fraud to sales ratio is exceeded, the merchant must work with American Express to reduce the number of disputed charges coming from their establishment.
Some cards, such as gift cards, are not eligible for the AESK Program, because they cannot be fully authenticated by the issuer at the time of the charge. These are not included in calculations of your ratio.
If you want to create alerts and measurements for these programs, you may want to consider adding a perch for these birds!
A new soft error message was announced in the Notification of Specification Changes (NOSC) April 2022 guide. This code will be returned when the merchant category code value doesn’t correlate with authorization. Direct link merchants and third-party processors are expected to be able to receive and process this new value by October 2022. Certification is not required, but this changes potential monitoring opportunities which (as we have seen before) can grow from changes to fees, and from fees to chargebacks.
American Express is expanding their support to include marketplace sellers and installment payment providers, which is big news. They’re adding definitions to their glossaries, expanding submission records to include enhanced data, and modifying chargeback requirements.
These fields are mandatory and certification is required. The name value is the Installment payment Providers (IPPs) which are offering the bill now pay later (BNPL) payment option and the end beneficiary. Additional chargeback response criteria for these transactions require a copy of the IPP’s terms and conditions agreed to by the cardmember and details explaining how the cardmember did not comply with the terms and conditions.
We’re pitching in to reduce the complexity of payments for businesses with our interpretations of network regulations and changes. However, if you want to get into the weeds, here are some relevant documents to reference and share with your technical teams:
Access Note: Log into your American Express merchant account to download these documents. If you don’t have a direct merchant account with them, ask your payment service provider for them.
Keep an eye on the Pagos Blog for additional updates on industry changes. Interested in working with Pagos? Check out Pagos.ai or contact us for more information.
We’ve provided the content in this blog post solely to inform and educate. Pagos doesn’t provide legal advice and this content shouldn’t be taken as such. You’re strongly encouraged to consult with your payments partners and legal teams before implementing any changes based on the content in this post.
