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Furthermore, both major card schemes have made changes to their interchange rates. Read on for details!
Mastercard Europe: New processing requirements and implications
Mastercard now mandates that Mastercard, Maestro and Cirrus card transactions need to be defined as either pre-authorization or final-authorization for e-commerce.
This process has been implemented by Mastercard to prevent cardholders having funds reserved on their cards for long periods of time.
Final-Authorization
The majority of e-commerce transactions today can be flagged as final-authorization. The requirements for flagging transactions as final-authorization are:
- Transaction must be captured within four (4) business days of the authorization date
- The capture amount must be the same as the authorized amount and be submitted in the same currency
- Transaction may no longer be canceled after authorization
Scheme Fee Impact
There is no scheme fee impact if your transactions meet the above mentioned criteria. However an Authorization Integrity Scheme Fee will apply to all final-authorization requests that fail to meet the criteria listed above. The Scheme Fee will be charged by Mastercard at the rate of 0.25% of the Authorization amount, with a minimum of EUR 0.03 per authorization. This scheme fee will not apply if you flag the transaction as a pre-authorization.
Pre-Authorization
A transaction with pre-authorization may be captured between zero and thirty business days after the authorization date.
This flagging should be used by:
- Hotels or booking sites where the amounts are reserved on a credit card until after the stay
- E-commerce merchants who may not capture the full amount within four (4) working days as part of the total order is not in stock
- Subscription merchants who are registering card details using a low value authorization and then canceling this authorization.
Scheme Fee Impact
For pre-authorization Mastercard has introduced an additional scheme fee. This fee is calculated as the EUR equivalent amount of 0.05% for BE, NL, LUX, ES, AD, and PT, 0.02% for UK, IE, FR , 0.08% for other European countries with a minimum of EUR 0.01 per authorization.
Adyen will start passing on these new above mentioned Scheme Fees as of November 1, 2014. If these Scheme Fees affect your business they will be reflected on your November period invoice.
Adyen has dynamic flagging capabilities which will enable you to only flag the transactions as pre-authorization in these specific cases; minimizing the extra scheme fees costs.
For more info please contact your Account Manager or Adyen support.
Changes to Visa and Mastercard Interchange in Europe
Visa and Mastercard have made a number of changes to interchange rates in Europe. These include:
- A new rate for EEA.
- New criteria for the IntraEEA rate.
- Introduction of Mastercard debit cards to European markets.
- Changes to the UK and Spain domestic rates.
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