Payscout is proactively monitoring merchant activity during the COVID-19 Pandemic, and is increasing communication with merchants as trends emerge. Here is a high-level overview of the Best Practices associated with merchant activity during this time of crisis.
- Communication is Key
- Review Your Refund Policy
- Consider Alternative Payment Channels
- Safety Applies to People and Payments
In these uncertain times, it’s crucial for merchants to communicate clearly and often with their customers. As an example, if a business has been affected in a way that results in delivery delays outside the normal time frame, the merchant should proactively communicate these delays with their customers, and offer refunds when applicable. At a minimum, increasing communication with your customers — with signage, alerts, or mass emails — is critical. The more open communication merchants can maintain with their customers, the better the outcomes will be.
This is an important time to review your refund policy. In particular, one thing to avoid is issuing refunds on cards that were not used for the original transaction. Merchants should never do this. The consumer can still chargeback that transaction, and the likelihood of winning a dispute in this context is very low. On top of having to refund the transactions, merchants can be saddled with arbitration fees — and these issues can ultimately delay the settlement of funds at a time when cash-flow considerations are of the utmost importance. Be proactive: Review and update your refund policy to avoid these issues.
Everyone, from your customers and clients, to your employees and vendors, is understandably concerned about their health and exposure to germs or contaminants. The channels through which you’re accepting payments should also be a part of your health and safety considerations. A near-field communication (NFC) or contactless card-reader is an excellent place to start for card-present transactions, and there are many viable alternatives to processing transactions remotely. These range from customer-centric options such as hosted payment pages or online portals, to internal-employee options like virtual terminals for processing phone (MOTO) transactions.
Adding these channels is quick and easy with Payscout — and the second-most important consideration after your customer and employee health and safety is the security of data/information in these payment channels — and we’ve got you covered there, as well. Our secure payment solutions are all PCI-compliant, and we have integration options that can significantly reduce the scope of your compliance requirements or take you out of scope for PCI-compliance altogether. This is our expertise, and we’re here to make it easy for you.
If you have any questions about ensuring your business preparedness during COVID-19, contact us at any time at 888-689-6088.
Mastercard has recently updated its Chargeback Monitoring Program. The new updates involve 2 different programs: the Excessive Fraud Merchant (EFM) Compliance Program and the Excessive Chargeback Program (ECP).
The EFM Compliance Program is intended to mitigate fraud on e-commerce transactions, while ECP is targeted at monitoring and reducing excessive chargebacks. Both programs have thresholds for fraud or chargebacks, and merchants are required to remain below these thresholds. When merchants exceed the threshold, they will be entered into a category and will receive a fine ranging from USD $500 to $200,000, based on how long the merchant is in the program for,and the number of chargebacks received.
Below are the thresholds for EFM and ECP:
EFM (Excessive Fraud Merchant Compliance Program)
- The total dollar amount (or local currency equivalent) of fraud-related chargebacks in a given month exceeds USD 50,000.
- The total number of fraud chargeback basis points (bps) is greater than 50.
- The percentage of monthly clearing volume processed using 3DS (including Data Only transactions) is less than 10% in nonregulated countries or 50% in regulated countries.
*The EFM Program does not apply to merchants in Germany, Liechtenstein, St. Helena, and Switzerland.
ECP (Excessive Chargebacks Program)
There are 2 levels in Mastercards’ Excessive Chargeback Program: Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM). In both cases, merchants are entered into the category when the two conditions listed for each program are met.
- The total number of chargebacks is greater than 100.
- The total number of chargeback basis points is greater than 150.
- The total number of chargebacks is greater than 300.
- The total number of chargeback basis points is greater than 300.
What do these changes mean for me?
To ensure compliance with Mastercard’s Chargeback Monitoring Programs, it is critical that merchants select a payment processing provider that is experienced in monitoring chargebacks and fraud. To learn more, contact email@example.com today.
As a function of Visa’s forthcoming changes, card-not-present interchange rates will be increased, meaning that transactions made online or over the phone will incur greater fees. For those in the Accounts Receivable Management (ARM) sector who take payments online or over the phone, these upcoming fee increases mean now is the best time to implement a convenience fee model, in order to avoid increased costs to your business. As the only fully-compliant solution in the ARM industry, Payscout’s convenience fee model can help businesses offset these fees while ensuring full compliance. To learn more about how to better prepare your business to take advantage of these upcoming changes, contact firstname.lastname@example.org.
- July 2020 Interchange Updates (Previously April 2020)
- October 2020 Interchange Changes
Visa has recently announced upcoming changes to their U.S. interchange rates, aimed at better reflecting the value and usage of its products. These changes were previously scheduled for April 2020, but have since been modified to come into effect in July 2020 as a result of the COVID-19 pandemic.
Interchange fees are the fees that are charged whenever a debit or credit card transaction is made, and typics made, wo components: a percentage fee based on the transaction volume (e.g. 1.65%), as well as a flat fee per transaction (e.g. $0.30). These rates vary depending on multiple factors such as the payment method, transaction amount, and business sector.
Below are the upcoming changes that will come into effect in July 2020.
Electronic downgrade interchange rates for transactions that fail to qualify for Custom Payment Service (CPS) rates will be eliminated. CPS is a Visa program with requirements for credit and debit transactions, which if met, can result in interchange rates being lowered to the best available rates in the system.
Currently, transactions which do not qualify for CPS rates are downgraded to Electronic or Standard interchange rates. Under the new changes, the interchange name for downgrade transactions will be renamed to “Non-Qualified”. The interchange rate for Non-Qualified transactions will be increased to 3.15% + $0.10 for consumer credit transactions and 3.15% + $0.20 for small business credit transactions.
The Business-to-Business interchange rate on Small Business products will be eliminated as of July 2020. Several other changes will be implemented in October 2020 (to be confirmed), which are detailed later on in this article.
A new Performance Threshold (“Supermarket Performance Threshold 0”) will be added to the top of the existing tiered Supermarket Credit criteria. This new threshold will have a transaction minimum of 350 million transactions, and a volume minimum of $17.5 billion. Additionally, the Supermarket Credit performance thresholds will be extended to Visa Signature and Signature Preferred transactions, and the existing performance threshold interchange rates will be modified.
Commercial Level 2 Fuel Interchange rates will be increased from 2.05% + $0.10 to 2.20% + $0.10. This interchange rate will apply to all purchasing and corporate cards, and the following Merchant Category Codes (MCC’s):
- 4468 (Marinas, Marine Service and Supplies)
- 5499 (Miscellaneous Food Stores- Convenience Stores and Specialty Markets)
- 5541 (Service Stations (with or without Ancillary Services)
- 5542 (Automated Fuel Dispensers)
- 5983 (Fuel Dealers- Fuel Oil, Wood, Coal and Liquefied Petroleum)
A new spend qualification tier (“Tier 5”) for Small Business Products will be introduced. The new Tier 5 interchange rates will require an annual spending of $250,000 or greater.
Interchange rates and category names from the Small Business Platform will be modified. The interchange category for Travel Service MCCs will be renamed from Business Electronic to “Business Travel”. Additionally, card-not-present programs will be renamed as “Product 1”, and card present programs will be renamed as “Product 2”. For example, the Business Card-Not-Present program will be renamed as Business Product 1, and Business Retail will be renamed as Business Product 2.
Furthermore, Visa has an additional series of upcoming changes coming into effect on 17 October 2020. Below are the key changes that will be taking place.
Effective 17 October 2020, the Retail 2 Program will be eliminated, and new interchange rates for Insurance, Services, Education, Healthcare, Real Estate, and Advertising will be introduced. In addition, the Services interchange rates will feature a minimum ticket size qualification, meaning that the incentive interchange rate is only available for transactions of $100 or greater. The ticket size qualification for Education, Healthcare, and Real Estate transactions will be for transactions of $500 or greater.
The new ticket size qualifications that are being introduced are designed to benefit higher ticket transactions from these sectors. As a provider specialized in the Education, Healthcare, and Retail sectors, Payscout can help you take advantage of these upcoming interchange rate changes.
The interchange rate name for CPS-qualified card-not-present transactions will also be modified to “Product 1”. Additionally, card-not-present interchange rates will be increased, meaning that transactions made online or over the phone will incur greater fees.
For those in the Accounts Receivable Management (ARM) sector who take payments online or over the phone, these upcoming fee increases mean that now is the best time to implement a convenience fee model, in order to avoid increased costs to your business. As the only fully-compliant solution in the ARM industry, Payscout’s convenience fee model can help businesses offset these fees while ensuring full compliance.
To learn more about how to better prepare your business to take advantage of these upcoming changes, contact email@example.com.
In October 2019, a series of operating regulatory changes from Discover® , Visa®, and Mastercard® will be made. This article describes the upcoming changes and when these changes will come into effect.
UnionPay IIN Range:
Effective October 18 2019, a new IIN range for UnionPay issuance will be available. The IIN (Issuer Identification Number) refers to the first eight digits of the card number, and is used to identify the type of card used. The new IIN range for the UnionPay network is 62292600 – 62379699.
- The time frame to initiate a Representment request will be reduced from 45 to 30 days after the Chargeback Dispute notice date.
- The time frame to initiate an Arbitration request will be reduced from 30 to 10 days from the Pre-Arbitration Inquiry decision notice date.
These changes will come into effect for disputes with an initial dispute notice issue date on or after October 18, 2019. For a more detailed explanation of the chargeback dispute process, see the infographic below.
Private Label Pricing:
Effective October 18 2019, changes to the Private Label Specialized Fee Program will be made. Internal transfer pricing for Private Label Specialized product purchase and credit voucher transactions will be lowered from 25.0% to 10.0%.
Estimated, Initial, and Incremental Authorization Processing:
Effective October 18 2019, 3 new merchant types will be eligible to send estimated, initial, and incremental authorizations when the final amount is unknown by the merchant. The 3 new merchant types are:
- Grocery stores and supermarkets- CNP only (5411);
- Electric vehicle charging (5552); and
- Parking logs, parking meters, and garages (7523).
Estimated/initial authorizations are used when the merchant does not know the final amount of a transaction (e.g. when checking into a hotel). Incremental authorizations are used when the estimate/initial authorization amount is insufficient or needs to be revised.
Credit Voucher and Merchandise Return Authorization Messages:
Under Visa’s updated acceptance rules, businesses are allowed to send authorization messages on credit voucher and merchandise return transactions, and effective October 19 2019, all merchants in the USA, Canada or Latin America will be required to send authorization messages on credit voucher and purchase returns. These authorization messages will be represented in the Processing Code Field by a value of 20.
The authorization messages will enable the card issuer to validate the cardholder account and decline potentially fraudulent cards. It will also improve the cardholder experience by enabling cardholders to view the credit or return on their online banking statement right away, minimizing return inquiries.
Safety Net Acquirer Fee:
Effective October 18 2019, a new rate for the Safety Net Acquirer Fee will be implemented. Safety Net is a service mandated by Mastercard which identifies fraud and notifies acquirers so that they can work with merchants to take action to mitigate the fraud and prevent further fraudulent activity. The new fee rate for this service is $0.0007 and will be billed per authorization.
Interchange Compliance Downgrade Program Fee:
Effective October 18 2019, a new rate for the Mastercard Interchange Compliance Downgrade program will be implemented. A new Interchange Compliance Downgrade Fee of $0.15 will be charged per downgraded transaction, with the goal of promoting more accurate interchange qualification behavior.
U.S. Assurance Framework:
Effective October 18, 2019, a new U.S. Assurance Framework to increase cardholder security will be implemented, part of which includes an increase in UCAF (Universal Cardholder Authentication Field) rates (see table below).
|UCAF Interchange Program||Existing Rate (Merchant/Full)||New Rate|
|Core Credit (Merchant/Full)||1.68% + $0.10||1.89% + $0.10|
|1.78% + $0.10|
|Enhanced (Merchant/Full)||1.83% + $0.10||2.04% + $0.10|
|1.93% + $0.10|
|World (Merchant/Full)||1.87% + $0.10||2.05% + $0.10|
|1.97% + $0.10|
|World High Value (Merchant/Full)
& World Elite (Merchant/Full)
|2.30% + $0.10||2.50% + $0.10|
|2.40% + $0.10|
|Unregulated Consumer Debit (Merchant/Full)||1.15% + $0.15||1.65% + $0.15|
|1.25% + $0.15|
|Unregulated Consumer Prepaid (Merchant/Full)||1.15% + $0.15||1.76% + $0.20|
|1.25% + $0.15|
Additionally, as part of the framework, a new compliance program called Excessive Fraud Merchant (EFM) will be implemented to help measure compliance at the merchant level. Merchants in the U.S. who meet all of the following conditions will be identified for the program:
- Minimum of 1,000 Mastercard e-commerce transactions
- Monthly net fraud greater than $50,000 USD
- Monthly net fraud greater than 50 basis points
- Mastercard 3DS payment percent less than 10% of total Mastercard payment.
Refunds/ Return Transaction Rates:
Effective October 18, 2019, the Consumer Interregional Purchase Return/Refund rate will be set at 1.00%, and the Commercial Interregional Purchase return/Refund rate will be set at 1.80%.
The infographic below provides a summary of the upcoming regulatory changes mentioned in this article.
As one of the top ten richest countries in the world, with one of the fastest-growing eCommerce markets, Brazil represents a great opportunity for businesses in the United States to access a rapidly expanding market.
With over 209 million consumers and a GDP of 1.87 trillion USD, Brazil is the ninth richest country in the world, and one of the fastest-growing eCommerce markets worldwide. Currently, Brazil has 66.4 million consumers who shop online, drawing in a revenue of 21 billion USD from eCommerce purchases. Between 2018 and 2022, online sales are expected to grow by almost 11 percent annually, with revenue from eCommerce consumers expected to exceed 31 billion USD by 2022, representing a tremendous opportunity for merchants and ISOs in the United States.
If you are an enterprise-level business conducting international eCommerce, Brazil is a viable and profitable market to tap, however, significant barriers to entry are frequently encountered. Some of the most common barriers faced by businesses trying to expand into the Brazilian market include understanding local laws, regulations and tax requirements, lacking a physical presence, cultural barriers, and finding the right partner(s) to gain access.
In Brazil, 69% of online payments are made by credit card, however, the vast majority of these transactions are via local credit cards, with only 20% of Brazilian consumers possessing international credit cards. With the majority of the Brazilian market not having access to international credit cards, providing payment acceptance for domestic payment methods is crucial. By having a legal and physical presence in Brazil, this facilitates your business’s ability to offer solutions for domestic payment methods, enabling your business to make the most of this burgeoning consumer class.
A local presence can also assist your business in attaining an in-depth understanding of compliance with local laws and regulations, ensuring secure and reliable processing and settlements. Similarly, knowledge of tax requirements in Brazil can help simplify the complexities of the taxation system, allowing your business to price your products and services competitively. Lastly, local knowledge of the culture and economy can also help facilitate cultural assimilation and eliminate cultural barriers, optimizing your business’s presence in the Brazilian market.
Payscout Brazil is a licensed Payment Service Provider (PSP) established in São Paulo in 2013. Our physical presence in Brazil affords your business access to a full range of domestic and international payment methods, including domestic credit and debit cards, Visa, Mastercard, Boleto Bancário, Bradesco Comércio Eletrônico, Banco do Brasil Comércio Eletrônico, Banrisul, and Banricompras. Payscout Brazil provides both POS and eCommerce solutions, along with its best-in-class fraud solution, Gumshoe, which offers the risk mitigation and stability essential for cross-border and eCommerce international payments.
To learn how you can access this booming market of over 200 million consumers, visit payscout.com/brazil.
American Medical Collection Agency (AMCA), a 3rd-party healthcare debt collection firm servicing 7.7 million consumers, recently experienced a massive data breach, exposing consumers’ personal data and payment information. AMCA subsequently filed for bankruptcy, as a result of fall out from the data breach. This event is a stark reminder of how crucial it is to abide by PCI compliance requirements and to understand if your software partners and providers are compliant.
- Definition of PCI Scope
- The Costs to be PCI Compliant
- Does Your Business Fall Within the Scope of PCI Compliance Requirements?
Payscout is a PCI Level 1 and PA-DSS certified Service Provider, and we have recently been reviewing our new and existing technology partnerships to ensure that our mutual customers are fully protected. We have integration solutions that, as our partner, can reduce your PCI scope, regardless of whether you offer an online application (PCI DSS requirement) or a distributed application (PA DSS requirement).
PCI Scope is established by the presence of a credit card number (PAN). If the PAN is ever transmitted, processed, or stored by your software, then it is a payment industry requirement to comply with PCI DSS and complete a rigorous compliance validation facilitated by an authorized QSA (Qualified Security Assessor) Company. Organizations that do not comply with PCI DSS face potentially serious consequences, which can include the following:
- Increased transaction fees
- Fines from the acquiring bank and/or card brands
- Responsibility for fraud loss in the event of a breach or other security incident
- Loss of ability to accept credit cards as a form of tender
- Reputational damage in the event of a breach
- Inability to claim safe harbor should a serious security incident impact cardholder data security
For a Software Company to become a PCI Compliant Service Provider, in addition to rigorous and time consuming annual audits, typical costs for QSA audits are as follows:
- PCI DSS $25k+ Annually
- PA DSS $30k+ every 3 Years + PCI DSS Annual Cost
In the event of a breach, the cost to resolve a security incident is $7 – $15 per credit card number. These costs could rise to $70k – $150k for 10,000 credit card numbers. Many software vendors and merchants have the potential to impact the security of many more than 10,000 card numbers, and so fraud loss could be astronomical. Following AMCA’s data breach, AMCA’s largest clients immediately terminated their relationships, further impacting AMCA’s ability to bear these expenses and consequently rendering them bankrupt. These consequences not only affect the software company, but additionally put all customers using the software at risk.
We can work with you to identify the best solution for your situation, based on your type of application and how it is distributed. In addition, we work with a QSA who can attest to your out of scope status and provide a letter certifying that status for your customer’s compliance audits.
There are many layers to PCI Compliance requirements. If you facilitate electronic payments within your software application, how you capture card details (card number, expiration date, and CVV) could put you in the scope of PCI Compliance.
According to current PCI Requirements, here’s how it works:
- If you capture payment card information directly within input fields in your application for transmission to a payment gateway via an API, you are in PCI Scope
- If you capture payment card information using a payment gateway’s hosted payment page, presented in either an iFrame or Modal window (Popup, Lightbox, etc), you are out of PCI Scope
- If you capture payment card information as a full redirect to a payment gateway’s hosted payment page, you are out of PCI Scope
- If you capture payment card information via some other method, requirements will vary.
How is your Product/ Software deployed?
- If your Product/ Software is deployed online as a Web Application, you are required to comply with PCI DSS requirements
- If your Product/ Software is distributed within a Client’s network (via either Desktop or Web Applications), you are required to comply with both PCI DSS and PA DSS requirements
Interested in learning more? Payscout’s Fran Fisher will be discussing PCI Compliance Scope in further detail at Ontario Systems’ 2019 PowerUp Conference.
Wondering if your Business falls within PCI Scope? Contact firstname.lastname@example.org so we can help you find out.
- What is UnionPay?
- Why UnionPay?
- UnionPay Products/Services
- UnionPay as a preferred payment method
- How can I accept UnionPay?
UnionPay (formerly known as China UnionPay, or CUP) is China’s sole bankcard association. It was established in 2002 in Shanghai, under the approval of China’s central bank. With over 7.5 billion UnionPay cards issued globally – more than Visa and Mastercard combined- UnionPay has grown to be the largest supplier of payment cards in the world.
UnionPay allows Chinese customers to pay with a trusted and familiar card brand, no matter where they are. As of March 2019, UnionPay cards are accepted in 174 countries and regions, and by 52 million merchants worldwide. In particular, in the US, over 80% of merchants accept UnionPay cards, greater than the US merchant acceptance for American Express cards. Additionally, almost all ATMs in the US accept UnionPay cards, as part of the 2.6 million ATMs worldwide accepting UnionPay.
UnionPay cardholders also receive exclusive privileges when traveling, including no foreign transaction fees, no purchasing limits, worldwide customer support, as well as discounts at various attractions and retailers around the world. In 2017, there were more than 131 million Chinese tourists worldwide, who spent approximately $115 billion overseas. In the United States alone, 3.5 million Chinese tourists are expected during 2019, with this figure increasing to 4.5 million annual visits by 2022.
The number of UnionPay transactions totaled 17.69 trillion in 2018, up 28% from 2017. With the increased global acceptance of UnionPay and growing number of Chinese tourists worldwide, this figure is only expected to continue rising at a rapid rate.
UnionPay supplies both debit and credit cards, although credit cards make up the majority of UnionPay cards issued. There are almost 900 million UnionPay credit card accounts, over 5 times greater than American Express. UnionPay also offers online and mobile payments, with their mobile payment app QuickPass hitting 150 million users in April 2019. As part of their online payment processing, UnionPay offers an e-commerce solution, UnionPay Online Payments (UPOP), which allows for cards to be accepted over the Internet with real-time transaction authorization.
According to the 2018 World Tourism Cities Federation report, mobile payments and UnionPay cards are the preferred methods of payments for Chinese tourists, ahead of Visa/Mastercard and cash. However, while there is a huge demand for UnionPay as a method of payment, many Chinese tourists are worried about the acceptance of UnionPay overseas. Therefore, once you set up UnionPay, it is highly recommended to display the UnionPay Logo on your website or store-front, ensuring that Chinese customers are aware that you accept this preferred payment method.
As a Principal Member and Global Acquirer of UnionPay International, Payscout can help you add this preferred method of payment to your e-commerce sites. Settling with Payscout not only saves you time, taking only 2 days versus the typical 5 days, but also saves you money on UnionPay processing with costs at 2.5%.
In addition to offering both debit and credit processing, Payscout offers tokenization and full integration with UnionPay SecurePlus. Tokenization improves issues with card security, while SecurePlus allows companies to accept both credit and debit cards without a redirect to a UnionPay Hosted Payment Page, thereby improving the customer experience and increasing conversions at the same time. SecurePlus also improves security, as all debit transactions receive an SMS authentication code, therefore reducing fraud risks and severely reducing chargebacks too.
We can help you get access to the world’s largest card network in the world. Visit acceptunionpay.com to get started with UnionPay today.
In the payments ecosystem, Convenience Fee models are rising in popularity, but many merchants and agencies are unaware that the card-brands have issued explicit rules on how these fees may be applied.
If you are currently deploying a Convenience Fee-based payment model, you should take care to review these card-brand rules.
- Charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant’s customary payment channels and not charged solely for the acceptance of a Card
- Added only to a Transaction completed in a Card-Absent Environment
- Not charged if the Merchant operates exclusively in a Card-Absent Environment
- Charged only by the Merchant that provides goods or services to the Cardholder
- Applicable to all forms of payment accepted in the payment channel
- Disclosed clearly to the Cardholder
– As a charge for the alternative payment channel convenience
– Before the completion of the Transaction. The Cardholder must be given the opportunity to cancel.
- A flat or fixed amount, regardless of the value of the payment due
- Included as part of the total amount of the Transaction and not collected separately
- Not charged in addition to a surcharge
- Not charged on a Recurring Transaction or an Installment Transaction.
The eighth rule in this list is where serious risks of non-compliance frequently arise. According to Visa’s rules, Convenience Fees have to appear (and be processed and authorized) as a single transaction by the merchant of record. Solutions which process convenience fees as two separate transactions are therefore non-compliant, and can compromise your merchant account.
If you’re currently deploying or considering a convenience fee model, be sure to ask your payment provider whether they process convenience fees as a single transaction or a separate transaction. If the convenience fee solution involves running the convenience fee as a separate transaction, you may be at risk of losing your merchant processing account and compromising your ability to accept payments altogether.
Many popular solutions are not fully compliant with card brand rules, which is why it is crucial to have a thorough understanding of these requirements to ensure that your provider’s solution is compliant. Fully compliant programs do exist that can minimize your business risk while reducing your payment acceptance costs.
Click here or call 888-211-4470 to learn more.
On April 18th, Payscout held its annual Bring Your Child to Work Day across the Los Angeles and New Jersey offices. Throughout the day, the children learned about what we do at Payscout, and got a first-hand experience of our award-winning culture!
The kids started off the day meeting new friends and reuniting with old friends, both in-person and across the country via live feed. After many intense rounds of Bingo and with tummies full of pizza, they learned about payment processing, and what better way to do so than with cookies! Using their Payscout dollars and Payscout cards, the kids learned about the Payscout mission by supporting the entrepreneurial dream one cookie box transaction at a time.
See below for some of our favorite moments from the day!
We would like to send a big thank you to all the kids, parents, and everyone who helped make this such a fun-filled day.