Mastercard and VISA Card Scheme Standards

Mastercard and Visa regularly update their card scheme standards. In particular, we want to draw your attention to pre-authorisation and authorisation processing and what this means for you. Adhering to the standards provides customers with a better payment experience whilst also avoiding possible fines.

Please review the following Mastercard and Visa standards to ensure you are processing pre-authorisations and authorisations in a compliant manner.

Pre-Authorisation

What is Pre-Authorisation?

A pre-authorisation is an authorisation request for an estimated amount. The original pre-authorisation amount can be adjusted if the final transaction is different to the original amount requested. Pre-Authorisations must be cancelled or completed within 24 hours of the Merchant becoming aware that the transaction will not be completed, or within the authorisation validity period which varies by industry (please see below).

How can I remain compliant?

Merchants must cancel (full cancellation or partial cancellation) or complete a pre-authorisation within 24 hours of the Merchant first becoming aware that the transaction would not be completed OR within the validity period.

Pre-Authorisation Example

A customer books in 3 night's stay at a hotel totalling $900 which is pre-authorised on their card. Later that day, the customer changes their booking to 2 nights a few nights later with the new total coming to $600. The merchant processes a partial pre-authorisation cancellation to release $300 back to the card holder.

Final-Authorisation or Purchase

What is Final-Authorisation?

Final-Authorisation is an authorisation request for an amount greater than zero where the final transaction amount is known, and the transaction is not expected to be cancelled after the authorisation request is approved.

How can I remain compliant?

As a merchant, you must complete your Final-Authorisation within 7 calendar days of authorisation approved, with the same amount.

Final-Authorisation Example

A customer dines at a restaurant with a bill totaling $200. At checkout, the customer elects to add $10 as the tipping amount. Final authorisation amount at check-out comes to $210. Transaction is settled and paid to the Merchant either the next day or within the week.

Account Verification

What is Account Verification?

Account Verification allows the Merchant to check the validity of the card without charging cardholders a ‘nominal amount’ or a pre-authorisation ‘hold’.

How can I remain compliant?

Merchants should use Account Verification service when a card number needs to be validated prior to setting up a recurring payment. Account Verification is an authorisation request with a $0 transaction amount therefore does not need to be finalised or reversed.

Account Verification Example

As a prerequisite for subscription, a customer registers their card account with the merchant. To mitigate the risk of the cardholder providing an invalid card or one without funding, the merchant sends an Account Verification request.

Pre-Authorisation Incremental or Top-Up

What is the Pre-Authorisation Incremental or Top-Up

Pre-Authorisation Incremental or Top-Up is a continuation of an existing pre-authorisation, where the original pre-authorised amount can be modified to reflect the additional amount required. An incremental authorisation is typically found in hotel and rental environments, where the cardholder has agreed to pay for any additional services incurred during the duration of stay.

How can I remain compliant?

Merchants need to submit a subsequent pre-authorisation and link it to the original pre-authorisation. The new amount is combined so that one pre-authorisation completion can be processed at the end.

Pre-Authorisation Incremental or Top-Up Example

A customer has hired a rental car for 4 days. A pre-authorisation amount of $400 has been approved on their Mastercard. The customer decides to extend the hire period to 5 days for an additional $100. The merchant retrieves the original $400 pre-authorisation and performs an incremental of $100. The new pre-authorisation amount will be $500 combined. The total amount and the validity period are both extended for 30 days. (Note - the amount is topped-up to $500 on Visa cards, but the validity period remains unchanged).

Pre-Authorisation Extend

What is the Pre-Authorisation Extend

A pre-authorisation extend is a continuation of an existing pre-authorisation, where the original validity period can be extended to cover the duration of a pre-authorisation. It is a $0 incremental authorisation, typically found in hotel, rental and online order environments, due to booking changes or if the product ordered is not in stock.

How can I remain compliant?

Merchants need to submit a subsequent pre-authorisation with $0 and link it to the original pre-authorisation. This will extend the duration of the original pre-authorisation but without changing the amount.

Pre-Authorisation Extend Example

A customer has ordered custom made furniture. The merchant processes a pre-authorisation for $250 using a Visa card, which has been approved with a 7 day validity period. The merchant anticipates delay in shipping beyond the 7 day validity period. While the pre-authorisation validity period remains, the merchant retrieves it and performs an incremental with $0. The pre-authorisation gets extended for 7 days from the day of the incremental approval.

Mastercard Validity Periods

What is the maximum pre-authorisation validity for Mastercard?

30 days from day of approval.

What is the pre-authorisation validity for Mastercard Incremental or Top-up?

Both the amount and the validity period will be extended for 30 days from day of incremental approval.

Visa Validity Periods

What is the the maximum pre-authorisation validity for the hotels, vehicle rental, cruise lines industry?

31 days from day of initial authorisation approval including any incremental authorisations.

What is the the maximum pre-authorization validity for other rental industries (e.g. boat rental, trailer park, bike rental)?

31 days from the day of initial authorisation approval, including any incremental authorisations.

What is the maximum pre-authorisation validity for Card Not Present (CNP) otherwise not specified?

7 days from day of approval.

What is the maximum pre-authorisation validity for Card Present (CP) - retail?

Day of approval (same as transaction date).

What is the maximum pre-authorisation validity for prepayments (including travel)?

Day of approval (same as transaction date).

What is the maximum pre-authorisation validity for installments/recurring payments?

Day of approval (same as transaction date).

What is the maximum pre-authorisation validity for restaurants and bars?

Day of approval (same as transaction date).

What is the maximum pre-authorisation validity for amusement parks?

Day of approval (same as transaction date).

What is the maximum pre-authorisation validity for delayed charges?

Day of approval (same as transaction date).

What is the maximum pre-authorisation validity in transit?

24 hours after arrival.