Interchange Optimization Guide

Integration Guidelines

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Interchange Optimization Guide

 

Address Verification Service (AVS) provides additional authentication for a particular transaction by requesting and verifying the cardholder address. The merchant is given better fraud protection when the cardholder is not physically present at the time of purchase. AVS may also help to prevent chargebacks if the merchant can identify a fraudulent transaction prior to completing the purchase. AVS is provided by Visa, MasterCard, American Express, and Discover Cards. Below is a list of general information related to AVS:

  • Street addresses to P.O. boxes are accepted if the information is part of the cardholder billing address.
  • Visa assesses a lower interchange rate if AVS is requested for MOTO or eCommerce CNP environment transactions. A match is not required.
  • Transactions processed in CP Retail environments requiring manually entry of the account information due to a bad magnetic stripe will receive a lower interchange rate if a request and response for verification of the cardholder zip code is completed. A match is required.
  [WPSM_AC id=22571]
[WPSM_AC id=22580]
Visa, MasterCard, and American Express offer businesses a platform for additional reporting to monitor user activity. Each of these payment card brands are referred to as commercial cards. Visa and MasterCard categorize commercial cards as Corporate, Business, and Purchase/Purchasing. American Express refers to commercial cards as Corporate Purchasing.

In order to provide businesses with additional reporting features, merchants are required to submit additional data with each transaction. When data is submitted with the transaction, the merchant may qualify for lower consumer card interchange rates. Level 2 and Level 3 data is not required to be submitted on Travel & Entertainment transactions.

 

Additional information about Level2/3 data:

  • Consumer cards do not support Level 2/3 data.
  • Level 3 cards can be processed as standard Level 1 cards.
  • When processing Level 3 data, Level 2 data must also be provided.
  • Not implementing support for Level 2/3 data (when processing cards supporting Level 2/3 data) results in higher interchange rates.
  [WPSM_AC id=22583]
[WPSM_AC id=22585]

All approved and partially approved Visa and MasterCard authorizations must be reversed in the case of the cancellation of a sale by the cardholder or an authorization request submitted by the merchant in error. In support of this regulation, merchants and acquirers must process reversals immediately for authorizations cancelled by the cardholder or erroneously entered by the merchant. Failure to do so will result in fees being assessed on any unsettled transaction authorizations.

 

Additionally, merchants who use the CWS Authorize operation to perform a $1.00 status check to validate the card must reverse (void) the authorization to avoid being charged misuse fees by Visa and MasterCard.

 

Service providers supporting the CWS Verify operation can use the $0.00 status check to perform the same card validation without performing a reversal (void).

 

To avoid fees assessed on unsettled authorizations the following is recommended:

  • Perform a status check vs. a full authorization for transactions that will not be processed.
  • All card-present status check authorizations should be reversed within 24 hours.
  • All card-not-present status check authorizations should be reversed within 72 hours.
  • Visa requires transactions to be cleared within 10 days of authorization for all MCC's except Travel & Entertainment segments which must be cleared within 20 days of the authorization regardless ofthe transaction date.
 

MasterCard identifies the following MCCs as exceptions (not required to adhere to the reversal mandate.)

 
MCC Exceptions
3351-3441 (Car Rental Agencies) 3501-3999 (Lodging) 4411 (Cruise Lines) 7011 (Lodging) 7512 (Auto Rental Agency)
 

Refer to Address Verification Service (AVS) section for additional information.

In order to qualify for the best interchange rates, transactions authorization and settlement amounts must be within the specified tolerance ranges. Tolerance ranges vary by card type and payment industry.

Note: Non-bankcard issuers (American Express, Discover, JCB and private label) do not support transaction tolerance requirements.
 
Brand Processing Details
American Express American Express does not have the same strict tolerance rules as other payment brands. No support is provided for incremental authorizations or partial reversals.
Discover Discover does not have the same strict tolerance rules as other payment brands. No support is provided for incremental authorizations, but it is available for partial reversals.
MasterCard MasterCard does not have the same strict tolerance rules as Visa. No support is provided for incremental authorizations, but it is available for partial reversals.
  • Restaurant/fast food/bars/nightclubs: Exempt from tolerance checking.
  • Beauty shops: +/- 25%
  • All other industries: +/- 10%
Visa Visa supports very strict tolerance levels; however, they do provide support for incremental and partial reversal transactions so that the authorized and settled amounts can come within the allotted tolerance.
  • Lodging: +/- 15% - Incremental and partial reversal authorizations allowed.
  • Auto Rental: +/- 15% - Incremental and partial reversal authorizations allowed.
  • Retail: None - No incremental or partial reversal authorizations allowed.
  • Restaurant: +/- 20% - No incremental or partial reversal authorizations allowed.
  • MOTO: None – Partial reversal authorizations allowed.
  • eCommerce: None - Partial reversal authorizations allowed.
  • Petroleum: None - No incremental or partial reversal authorizations allowed.