MasterCard and Maestro tightened up the regulations for the authorisation process in 2014.

As a result, extra costs are charged for MasterCard and Maestro payments that do not fulfil the new regulations. These extra costs are being passed on from June 2015.

These changes may well lead to you changing your payment processes. Below, we explain the new rules and give you a few hints and tips about how to avoid unnecessary costs.

What is an authorisation?

The authorisation is part of every transaction made with a payment card and takes place within a fraction of a second, on your payment terminal or online payment page. The authorisation for a payment card is a check to ensure that there is sufficient credit in the bank account. The transaction amount, after approval by MasterCard/Maestro, is temporarily held as a reserve.

MasterCard/Maestro distinguishes 2 types of authorisation

Pre-authorisation: This method is often used in the travel and rental sectors and in the e-commerce business. The card holder provides his payment card as 'collateral' and the retailer reserves an amount on the card. The payment card is not immediately charged but the amount is temporarily reserved. The definitive transaction often takes place once the products/services have been provided.

Examples of authorisations:

  • A customer needs a hotel room in three weeks and makes a reservation;
  • In order to hire a car, a deposit is reserved on the credit card;
  • For the purchase of products in an online store, where the shipment costs can vary, a reserve is made via the credit card.

Final authorisation: This relates to a 'regular' transaction with a payment card. The authorisation (reserve) and transaction take place at the same time and the transaction is finalised immediately. Final authorisation takes place automatically in the payment terminal or on the online payment page, but can also be requested by telephone. Final authorisation is used if a transaction amount is known in advance and will not change.

An example of this is a pair of shoes that are bought in a store or webshop and are paid for via credit card.

New rules with respect to final authorisations

The costs that MasterCard/Maestro charge with respect to the new authorisation process relate to final authorisations. The new rules have been applied to ensure that reserves on the MasterCard/Maestro cards are not held for any longer than necessary. Card holders are not limited in terms of expenditure as a result.

The following new rules apply:

  • Incomplete final authorisations may be held for a maximum of 4 working days and must be converted into a transaction within 4 days;
  • The amount and the currency of the final authorisation must be the same as the transaction amount;
  • Final authorisations cannot be cancelled.
  • Extra costs will relate to authorisations that do not fulfil the above conditions. The extra costs amount to 0.25% of the authorisation amount with a minimum of € 0.03.

Calculation example

A transaction of € 100 is not authorised according to the new guidelines from MasterCard/Maestro, this means that an extra amount of € 0.25 (0.25% x € 100) will be charged.

What EMS recommends

MasterCard/Maestro identifies all 'non-reserves' (read: pre-authorisations) as final authorisations. In order to limit extra costs, we advise you to bear the following in mind:

 For offline payments (via the payment terminal)

  • Make sure that the software on your payment terminal is always up-to-date. Contact the supplier of your payment terminal, if in doubt;
  • Ask the card holder in advance for the preferred payment method; interrupted transactions are often authorised but not converted into a transaction;
  • If an authorised transaction is cancelled, you must process the full authorised amount as a reversal;
  • Make sure that the connection for your payment terminal is ok (check cables/internet connections regularly;
  • Make sure that the card holder does not remove the card from the payment terminal during the payment process.

 For online payments

  • For an order and payment from abroad, make sure that the amount and currency of the final authorisation is identical to the transaction amount;
  • Make sure that there is clarity for your customers. If they are reserving a ticket or booking a hotel with you, tell them clearly that the booking is definitive and cannot be cancelled. Include this in your General Terms and Conditions, in the conditions for ordering and delivery or in the FAQ's on your website. Make sure there is a clear order button which explains that it relates to an order, with the corresponding payment obligations;
  • Do you sell products? Make sure that your website provides details of the conditions for ordering via your website. Explain that the order and payment cannot be cancelled but that the buyer can obtain a refund if the order is returned within 14 days;
  • Make sure that you finalise a payment within 4 days; if a payment is cancelled, you must process the full transaction amount as a reversal.

Explain the new rules for MasterCard and Maestro to employees to prevent any issues in relation to your customers' payments.

If you still have questions, please contact us. We will be happy to provide further information.