What you need to know: Mastercard card-on-file indicator

Mastercard introduces the Mastercard card-on-file indicator for identifying Mastercard transactions performed using stored payment credentials.

Following similar regulations by Visa in 2017, Mastercard announced the introduction of a new card-on-file indicator for identifying recurring Mastercard transactions performed with stored payment credentials.

Recurring transactions are known as card-on-file transactions or subscription transactions.

Card-on-file transactions

A card-on-file transaction is a transaction where a cardholder authorized a merchant to store the cardholder’s Mastercard or Maestro payment details. And then the cardholder authorizes that same merchant to bill the cardholder’s stored Mastercard or Maestro account.

A card-on-file transaction can be cardholder-initiated transactions (such as an ecommerce transaction, mail order transaction, or phone order transaction) or, as a result of an agreement with the cardholder, merchant-initiated (such as installment payment and Account Status Inquire (Account Validations)). Account Status Inquiry for new cards should not include the new card-on-file indicator.

Subscription transactions

A recurring transaction can be classified as a subscription payment when:

  • The transaction is performed as a result of an agreement between a cardholder and a merchant in which the cardholder authorizes the merchant to bill the cardholder’s Mastercard or Maestro account on an ongoing basis, with no specified end date. Each payment may be for a variable or a fixed amount.
     
  • Transactions resulting from a top-up agreement where the merchant initiates the payment as a result of the agreement with the shopper will need to be flagged as recurring payment transactions. Top-up transactions initiated by the cardholder are not recurring payment transactions.

What changes?

From June 12, 2018, merchants processing Mastercard transactions in all regions are required to submit the correct transaction indicators as follows.

Transaction flagging

By default we will flag recurring transactions as subscription so you don’t have to.

For merchants offering recurring transactions that are not subscription, we can flag your traffic as card-on-file for you.

Please contact your dedicated Account Manager or our support team to finalize the configuration.

Subscription and card-on-file merchants

For merchants processing both card-on-file transactions as well as subscription transactions on the same merchant account we also offer an API field for flagging recurring transactions.

In order to identify when you are sending an authorization referring to a recurring payment or to a card-on-file transaction, you need to provide attribute “recurringProcessingModel” in your API call.

In terms of your Adyen integration, the same technical changes/configurations are required in order to adhere to both Visa and Mastercard compliance updates.

Next steps you need to take

Please make sure that you make any necessary changes by June 12, 2018.

Mastercard will monitor the use of the new indicators for compliance purposes.  

Non-compliant assessment fees could be communicated in the future.

We will monitor issuer behavior during the rollout of the new transaction indicators to rule out any negative impact when sending the new indicators to issuers.

Read next: Update on Visa’s new card-on-file transaction type