Don't Get Tripped Up by Fall Card Rule Changes


Shelli Garcia

Risk & Compliance

August 17, 2022

August 17, 2022

August 17, 2022

In April 2022, we began a series of blog posts dedicated to the bi-annual release of card brand rules and regulations changes. The documents Visa, Mastercard, and American Express publish each spring and fall are very long and complex, so it’s reasonable to wonder if reading them is really that important. We think it is; as a merchant, you likely use multiple processors that will support these changes at different times and in different ways, and you’ll need to be prepared to adjust accordingly. We want to help you understand what is changing and when, so you can have more time to prepare and more context to consider how these changes will impact your customer experience and bottom line.

In a couple of months, the next round of publications will be released, and some of the changes previously announced will become effective policy and process. This is the time to check in and determine if you're ready.

Don’t let new and different regulations trip you up this fall. Read on for a recap of the biggest upcoming changes, along with a little more context and advice on how to evaluate or adapt appropriately to what’s coming in October 2022.

Upcoming Changes to 3D Secure (3DS)

Visa, Mastercard, and American Express are all sunsetting 3DS versions 1.0 and adopting EMV specifications for 3DS 2.0 or higher in October (mid-October for Visa and Mastercard). As a result, you’ll likely notice some changes in the cards you accept. For example, you may see more Maestro cards that are eligible for e-commerce transactions using 3DS, because Mastercard has notified all issuers that these cards must be enrolled in 3DS 2.2. 

Similarly, Visa is requiring that more credit and debit cards issued in the Asia-Pacific region be enrolled in EMV 3DS (2.0 or higher)., This includes cards issued in Cambodia, Hong Kong, Indonesia, Macau, Malaysia, Philippines, Singapore, South Korea, Thailand, and Vietnam. Australia, India, and New Zealand issuers will also add reloadable prepaid cards in addition to the credit and debit cards that must be supported with EMV 3DS.

Assuming you’re not on a fraud warning program, you should experience fewer fraud chargebacks on Visa cards if the EMV 3DS response and the Cardholder Authentication Verification Value (CAVV) are included in the authorization requests. 

Surcharging Options for Visa and Mastercard Canadian Merchants 

Canadian merchants who successfully adopt these new surcharging rules for Visa and Mastercard can begin recouping some of the card transaction expenses after October 2022. If you’re a merchant in Canada, you may well be thinking about applying surcharges, but there’s a lot to consider first and multiple steps you need to take. For example: 

  • You must provide 30 days advance notification in writing to the card network.

  • Because the card network rules seek to ensure equity across brands and card product types, the rules prohibit the application of surcharges to one brand and not others. 

  • You can only apply surcharges on consumer or corporate cards (not debit or virtual cards).

  • You must identify surcharge amounts on all receipts/checkout pages. 

  • In the event of refunds, you must also refund the surcharge amount (or prorated amount). 

Merchants should also be aware that on Visa transactions, issuers or acquirers can file a compliance chargeback if they believe a merchant fails to follow the surcharge rules. A compliance chargeback is a process where Visa resolves disputes when an issuer or acquirer claims that a financial loss has occurred or will occur for a specific amount, and no dispute right is available.

The decision to apply surcharges can have an impact on your sales. If only you had a way to match your historical sales data by card type and product or monitor sales across multiple processors after launching surcharging… You’re in luck! We have birds for that! 

  • With Parrot by Pagos, if you have historical sales data with your BINs, you can associate the BIN used for your sales to the card type and product types. You can then use this data to estimate the historical mix of cards that are eligible for surcharging and decide which card products you might want to apply the surcharge to. Additionally, you can use the eligible consumer and corporate card product types to estimate your interchange.

  • With Peacock by Pagos, you can monitor your sales by network brand and card type (e.g. credit, debit, or prepaid), and watch for trends of sales shifting to debit. If sales begin to drop, you’ll see it in near real time across all your outlets and processors!

Changes to Recurring Billing Processes

American Express announced requirements effective on October 14, 2022 that address the use of credentials-on-file without direct participation from the cardmember. 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. Amex is also adding the following new terminology to their glossary since this is a new concept for them: cardmember-initiated transaction (CIT), credential-on-file, merchant-initiated transaction (MIT), and original transaction identifier (O-TID) 

Credentials-on-file are a great way to drive loyalty and reduce friction at checkout. Typically, the deeper the connection is between you and your customer as expressed by your intent, the higher the approval rate. Recurring transactions, for example, signify a long standing relationship with a customer that they probably don’t want to disrupt, whereas one-time transactions means you might be transacting for the first time.

If you employ credentials-on-file, you can integrate with Peacock by Pagos to monitor the use of Stored Credentials. Peacock provides you with a detailed view of the performance for the different types of intentions you're processing, and can provide answers to these key questions:

  • What is my approval rate for each type of stored credential transaction type?

  • How much share of my volume is going to each?

  • How successful is each stored credential transaction type by card network?

  • What are the top decline codes for each stored credential value?

Your Next Steps

At Pagos Solutions, we’ll continue to monitor card network changes and bring those insights to you. We understand the challenges you face and are building features that make it easier for merchants of all kinds to understand their current data. If you are looking for efficient access to help you troubleshoot, analyze, or even forecast the impacts of card network changes or options like surcharging, then contact us today and let us help you see what you are missing!

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