Payments are Constantly Changing – October 2019 Regs Release Highlights

The joys of the fall season…football, beautiful weather, leaves are falling, and card brand rate changes. As the card brands tend to make their regulatory and rate changes every Spring and Fall, we like to keep you updated on many of the most significant changes, so you are prepared for the final quarter of 2019 and ready to start of 2020 on the right track. While we had a lot of changes in April this year, the October changes are much lighter, with e-commerce transactions affected the most. Below are highlights from eight of the most significant updates:

MasterCard – October 2019
1.  3D Secure 2.0 (Identity Check) Requirements and Rate Changes – MC is revamping their 3D Secure 1.0 protocol to support 3D Secure 2.0, which is a more dynamic authentication solution. Also, they are re-branding 3D Secure 2.0 as Identity Check. With these updates, there are several rate and fee changes:

  • MC is increasing their 3D Secure 1.0 fees from $0.03 to $0.05 per auth.
  • MC is introducing a new Identity Check 2.0 fee (3DS 2.0), which will be 0.01% of all authorizations using 3DS 2.0 protocol.
  • MC Full and Merchant UCAF rates will no longer be incentivized, and will carry the same rates as the current Merit I rates. See the table below:

MC Rates Table











2.  Reduced Rebates on MC International Refund Transactions – MC is reducing the amount of interchange returned on refund transactions for US merchants accepting International cards. Reimbursement for refund interchange will be reduced to 1.00% for Consumer cards and 1.80% for Commercial cards. Reductions are outlined in the table below:

3.  Elimination of Level 2 and Large Ticket Incentive on MC International Purchasing Cards – MC is reducing the benefits for entering Level 2 and Level 3/Large Ticket data on Purchasing cards issued outside the merchant’s country.  Below are the rate changes:

4.  New Incoming Chargeback Fee – MC will charge $1.35 per incoming dispute, as defined as the MasterCom Claims Manager Fee.

5.  Increase in MC Processing Integrity Report Fee – for processors that pass on the Processing Integrity Report Fee (PIF Report fee), the fee will increase from $0.015 to $0.017 per transaction. This report fee applies to every transaction that is penalized for not following proper authorization rules:

  • Not reversing an authorization in a timely manner
  • Processing and reversing $1.00 authorization status checks
  • More than 20 declines on the same card and same merchant within a 24-hour period

6. MC Interchange Qualification Requirement for Transaction Integrity Class Indicator (April 2020) – This is a reminder that MC will be requiring that merchants pass a Transaction Integrity Class (TIC) value on the authorization and settlement for every transaction to achieve optimal interchange rates. Mismatched or missing TIC values may cause a downgrade to Standard rates or potentially rejects. This requirement will not be enforced until April 2020, but merchants and their software providers should prepare.

Visa – October 2019
7. Purchase Refund Authorization Mandate – As previously communicated, merchants will be required to support authorizations for refund transactions. Beginning in July 2020, these transactions will be subject to Zero Floor Limit ($0.20 for settlement with no auth) or Misuse Fees ($0.045 for auth with no settlement). Also, issuers may dispute a refund with no authorization beginning in April 2020.

  • Additionally, Discover is requiring similar support for merchants by April 2020.
  • MasterCard has required issuers to support by October 2019, and acquirers to support by April 2020. They have not announced a requirement for merchants to support yet, but we would expect to hear that soon.

Discover – October 2019
8. Dispute Timeframe Changes – Discover is reducing timeframes for several steps in the claims resolution process:

  • Dispute Arbitration requests will be reduced from 30 to 10 days
  • Representment requests will be reduced from 45 to 30 days
  • Both of these changes will begin to be enforced on incoming disputes dated October 18th, 2019, or later.

Additional changes may be coming, so keep an eye out on our blog for any new updates. If you would more info to understand how these changes might impact your business, contact Optimized Payments at or call (800) 846-1305.

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