Network Updates Summer 2013 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. EMV Update on Card Schemes Acceleration of Chip Migration (EMV) (Recent updates are in BOLD) The Program: MasterCard, Visa, American Express and Discover have released their roadmaps to EMV (Europay, MasterCard and Visa). These roadmaps begin the discussion of their plans to accelerate the migration to EMV chip technology in the United States. The card schemes roadmaps will help prepare the U.S. payment system for the arrival of mobile payments by building the necessary infrastructure to accept and process chip transactions. Dates VISA MasterCard Discover American Express April 2013 October 2013 April 2015 Acquirers and subprocessors must support EMV 3rd Party ATMs must support EMV October 2015 US Liability Shift 1 Acquirers and subprocessors must support EMV International ATM liability shift 2 Merchant Account Data Compromise (ADC) relief (Phase I) US Liability Shift 2 Merchant ADC Relief (Phase II) October 2016 ATM Liability Shift 2 October 2017 Dispenser Liability Shift 1 ATM Liability Shift 1 Dispenser Liability Shift 2 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 Acquirers, subprocessors and direct connect merchants must support EMV data elements Acquirers, subprocessors and direct connect merchants must support EMV data elements for Pulse transactions Acquirers and subprocessors must support EMV, including mobile US Liability Shift 2 US Liability Shift 2,3 Dispenser Liability Shift 2 Dispenser Liability Shift 2,3 1
The Visa, MasterCard, Discover and American Express EMV programs Incentives for those merchants who upgrade to EMV chip-enabled terminals To encourage EMV adoption, Visa, MasterCard, Discover and American Express have each announced a waiver from annual PCI DSS validation. Contact your relationship manager for more information on the PCI DSS validation waiver. - At least 75% of merchant s transactions originate from dual interface chip terminals and are capable of processing end-to-end chip transactions. - The merchant has not been involved in a breach of cardholder data (merchants previously involved in a breach may qualify if they have completed subsequent PCI DSS validation). - All merchants must continue to comply with PCI DSS. - Program enrollment is required. - For MasterCard, eligible merchants are Level 1 and Level 2 merchants MasterCard will allow for account data compromise relief - October 2013 if 75% of transactions initiated at EMV compliant terminals - 50% relief - October 2015 if 95% of transactions initiated at EMV compliant terminals - 100% relief Beginning October 2015, Visa, MasterCard, Discover and American Express will implement a liability shift for domestic and cross-border counterfeit transactions. VISA - October 2015 Point-of-Sale liability for counterfeit fraud is assigned to party that is responsible for transaction not being done using EMV - October 2017 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 - April 2013 International ATM liability shift based on hierarchy of which party has the most secure option enabled - October 2015 Point-of-Sale counterfeit fraud liability is assigned based on hierarchy of which party has the most secure option enabled. Standard rules apply when both are equal - October 2017 Dispenser Liability Shift American Express - October 2015 Point-of-Sale counterfeit fraud liability is assigned based on hierarchy of which party has the most secure option enabled - October 2017 Dispenser Liability Shift Discover - October 2015 Point-of-Sale counterfeit fraud liability is assigned based on hierarchy of which party has the most secure option enabled - October 2017 Dispenser Liability Shift Information related to liability shifts and PCI-DSS validation waiver is a summary and is subject to the appropriate network s operating regulations. Contact your Relationship Manager for more detail. 2
MasterCard Modification of Network Access and Brand Usage Fee The Program: The MasterCard Network Access and Brand Usage (NABU) Fee of $0.0185 is a network pass thru fee assessed on authorized transaction records. The Change: MasterCard has increased the Network Access and Brand Usage fee of $0.0185 per authorized transaction record to $0.0195. The Timing: Effective July 1, 2013 the NABU fee is now $0.0195. The Impact: Merchants will see an increase in their MasterCard NABU fees. MasterCard Dispute Services Pricing Update The Program: MasterCard has announced a fee increase to services that support dispute processing. The Change: The new fees are listed below. The fees are assessed on the number of disputes and on documentation that can be exchanged between the merchant and cardholder bank during the dispute process. The Timing: The new fees are effective October 1, 2013. Category Current Effective 10/1/13 MasterCard Retrieval Request Fee $1.00 $1.30 MC Chargeback Support Document Fee $0.35 $0.45 MC Chargeback Assessment Fee $0.006 $0.007 MasterCard Documentation Image Fee $0.30 $0.45 The Impact: Merchants will see the updated fee amounts reflected on the October invoice. 3
MasterCard Modifications to U.S. Region Small Business Credit Card Programs MasterCard has announced several changes for their Small Business card rate programs. These changes will be effective July 18, 2013. Small Business Spend Processing (SBSP) Small Business Spend Processing (SBSP) is a new spend-based approach focused at the account level. Participation in SBSP is optional for issuers. If the issuer does not choose SBSP for a portfolio, that specific portfolio will default to BIN level processing based on the card product. MasterCard will perform quarterly qualification reviews to determine the interchange level for each card enrolled in SBSP. Transactions from Small Business credit card programs that utilize Spend Processing will qualify for any interchange structure based on each account s annual spend. Those that do not use Spend Processing will qualify based on product only as follows: Interchange Structure Spend Processing (Annual Account Spend Qualification) 1 Less than $25,000 Core 2 $25,001 - $50,000 World 3 $50,001 - $100,000 World Elite 4 Greater than $100,001 N/A Business Credit Product As a result of these changes, Vantiv merchants will see the following new rate descriptors on their interchange reports effective with the July release: Old Interchange Rate Descriptor MC COML BUS MC COML BUS WORLD MC COML BUS WORLD ELITE N/A New Interchange Rate Descriptor MC COML BL1 MC COML BL2 MC COML BL3 MC COML BL4 Enhanced Value for Small Business MasterCard discontinued the Enhanced Value program effective with their April release. Transactions on enrolled and eligible cards will continue to receive Enhanced Value interchange through July 17, 2013. 4
Visa Visa Recurring Payments Indicator Requirements Updated The Program: The recurring payments indicator (RPI) is a mandatory message field for recurring payments that must be populated in the authorization and clearing messages for all subsequent transactions in a series of recurring payments transactions. A recurring payment is a transaction in which a merchant is authorized by a cardholder to periodically bill their payment card for recurring goods or services (subscriptions, memberships). The Change: Effective immediately, U.S. merchants may populate the recurring payments indicator (RPI) field on the first of a series of recurring transactions. Because Issuers of non-reloadable prepaid card products are required to decline authorizations if the RPI is present, merchants may experience declines with the code 05-Do Not Honor on a non-reloadable prepaid card when populating the RPI field for the initial transaction in a series. Receiving a decline in this scenario potentially reduces the risk associated with future transactions, since the nonreloadable card may not have sufficient funds to cover the subsequent recurring payment. The Timing: Effective immediately. Retrieval Requests on Easy Payment Service Transactions The Program: Merchants serving the retail fuel industry should review the updated rules to ensure compliance. U.S. fuel-related merchants 1 are required to meet certain data requirements for Visa Fleet transactions. The Change: Merchants must be able to: Recognize a Visa Fleet card when it is presented at the point-of-sale, and provide complete and accurate enhanced data from the fuel transaction to their processor Correctly identify the service prompt indicator encoded on a Visa Fleet card magnetic strip and prompt the cardholder to provide the required data; then forward that information with the enhanced data from the fuel transaction to their processor. The Timing: October 1, 2013 1 Merchants in the following merchant category codes (MCCs) are affected by these updates: MCC 4468 Marinas, Marine Service and Supplies; MCC 5499 Miscellaneous Food Stores: Convenience Stores and Specialty Markets; MCC 5541 Service Stations (With or Without Ancillary Services); MCC 5542 Dispenser; and MCC 5983 Fuel Dealers: Fuel Oil, Wood Coal and Liquefied Petroleum Visa Chargebacks on Fuel Transactions In its continuing effort to reduce exceptions, Visa has introduced an edit on Dispenser (AFD) transactions that will reject an issuer s chargeback under the following circumstances: The issuer and the merchant are in the U.S. A status check of $1.00 was approved by the issuer The sale did not exceed $75 on a non-fleet card sale or $150 on a Fleet card sale The chargeback reason code was 72-No Authorization 5
Discover Discover Revises Surcharging Regulations Discover has clarified the conditions under which merchants may add a surcharge to card sales, specifically in regard to disclosure and inclusion of the surcharge on sales receipts. The surcharge allows a merchant to recoup the cost of acceptance for payment processing. The surcharge amount may not exceed the cost of acceptance for the card sale. Merchants must assess the surcharge on Discover card sales in the same manner as they would surcharge sales from other payment networks. Merchants will be required to disclose their surcharge policy at the point of store entry and the point of sale prior to the purchase transaction being completed. Merchants will be required to disclose the surcharge amount on the receipt. Several states have laws that prohibit or restrict surcharging. Merchants should consult legal counsel for review of state laws and how they may impact the ability to surcharge. Merchants that elect to surcharge must provide written notice to Discover and the merchant acquirer 30 days prior to surcharging. To notify Discover, the merchant should go to the Merchant section of DiscoverNetwork. com and select Contact Us. Note - These conditions, which became effective on March 22, 2013, may require system changes at the terminal or POS application. Discover Chargebacks for Non-Response to Retrieval Requests Effective April 2012, Discover amended the chargeback rules to allow Issuers to initiate a final and nonappealable chargeback for Failure to Respond to Ticket Retrieval Request (except retrievals for Good Faith Investigations). Merchants are strongly advised to always respond to retrieval requests with legible and complete documentation to avoid a non-reversible chargeback. 6
PIN Debit PIN-less Debit Update As the PIN debit market in the United States continues to evolve, debit networks strive to create new products and routing options for acquirers and merchants. The newest product facilitates PIN-less debit transactions at the point of sale. A PIN-less POS debit transaction is a sale for $50 or less that doesn t require a PIN or a signature from the consumer. Under current processing rules, those transactions would be routed as a signature or offline debit transaction. With the new product, those transactions can be routed to a debit network. There are two scenarios to PIN-less POS debit: The consumer would swipe his or her card. If the transaction is $50 or less, the transaction would automatically be processed without a PIN. If the transaction is more than $50, the PIN pad would prompt, according to the merchant s instructions. The consumer would be prompted to select Debit or Credit. If the consumer chooses the credit option and the transaction is $50 or less, the merchant or acquirer may route the transaction to a PIN debit network without a PIN. The card issuer retains liability for disputes, provided the merchant meets all requirements for PIN-less POS debit. For example, cash back is not allowed on a PIN-less POS debit transaction, if it was processed as such, the merchant could be liable for a dispute. 7