While there is so much interesting news out there today, I know what’s really on your mind . . . what’s going on with Mastercard! So here you go . . .
In drafting the white paper (which I have affectionately renamed “the White Napkin”) and seeking input from clients and others, many issues and considerations have come to light that I’d like to share with everyone, so you don’t feel alone in processing these changes (see what I did there with “processing?”).
Transaction processing rules not yet available
The new rules are not yet published and if Mastercard follows its SOP, they won’t be publicly available until the next release of its Mastercard Transaction Processing Rules, which could be as late as September or October. This means merchants seeking to comply with the new rules will not have access to them as a primary source until after they become effective (which is obviously unnerving) and, instead, are left to rely on the limited materials that are currently available, such as notices from their processors and the PowerPoint deck presented by Mastercard at PaymentsEd’s January 25 webinar.
This approach, however, is problematic because (i) many processor notices I have reviewed are incorrect, and (ii) some of the information in the PowerPoint deck conflicts with other materials I have seen from Mastercard, such as AN 4934 (which announced the changes) and a draft markup of the TPR reflecting the rule changes, the accuracy of which I and others have been unable to verify.
For example, these materials include conflicting information regarding the renewal notice requirement, such as whether they must be sent for renewal periods of six months or greater than six months, and the timing of the notice, 3-7 days or “at least 7 days” before the renewal. And even more perplexing, the Mastercard PowerPoint deck actually disclaims its own accuracy, deferring to the actual (yet elusive) rules, noting “To the extent of any conflict(s) between the presentation and the Mastercard Rules, the Mastercard Rules shall control.” Obviously disconcerting.
Requesting a variance from your processor
Jonathan Trivelas at Mastercard noted during the Jan 25 webinar that if a merchant has any issues with the new rules, particularly with respect to compliance implementation, they should seek a variance from their processor. From some merchants I have spoken with about this process, particularly in seeking an extension on the notice requirements, the application is pretty invasive, asking about the merchant’s (in)inability to comply and when they believe they will be able to fix these deficiencies.
Rather than follow Mastercard’s guidance, some merchants have opted to not submit the application given the information requested and suggestion that by submitting it, they are committing to comply with every aspect of the new rules. While this approach may not be for everyone, for those considering whether or not to submit a variance, you are not alone.
The transaction receipt remains the greatest concern to most merchants, particularly for monthly charges. The current version of the White Napkin advances several policy arguments disfavoring the receipt, including the operational and cost challenges to merchants, the multiple reminder notices and opportunities cardholders have to cancel a charge, inundating and confusing cardholders with multiple notices, and possibly giving rise to fraudsters who might send fake receipts with purported cancel links that may be used to surreptitiously collect cardholder information, or worse, download malware.
On this last point, I actually have and intend to provide Mastercard with an example of a fake payment receipt email I received for a non-existent antivirus protection subscription renewal. Yes, Virginia, they’re out there. And if these increase, consumers will likely become suspicious of these receipts and ignore them (as well as other merchant notices), thus defeating the purpose of Mastercard’s intentions.
No one-size-fits-all solution
Last point. In the last week, I have had many conversations with merchants of all shapes and sizes and in various product categories who are struggling to figure out whether these new rules apply to them, how they will comply, and whether there are legal or policy arguments in favor of non-compliance. As each of these situations are fact-specific, there is no one-size-fits-all approach to this analysis. Again, I’m sharing this news so you don’t feel alone in navigating these new and murky waters. I’ll keep you updated as I learn more.