Authorize.Net Support of Visa Mandates

[Michelle]

Visa recently introduced three new compliance requirements (known as mandates) related to the use of Visa's authorization and clearing systems. These mandates all have associated assessment fees that are now in effect. These mandates are most likely to impact your merchants if they are enabled for the Customer Information Manager (CIM) and/or currently submit $0.01, or other low amount authorizations as a means of validating card information for a payment profile.

The purpose of this post is to let you know what Authorize.Net is doing to support these mandates. It also includes best practices for compliance and avoidance of excess fees. Fair warning here: I’m going for the world’s longest post with this topic, because, well, it’s all relevant to you and your merchants if they’re using CIM or submitting low amount authorizations to validate card info. If you’re not doing either of those, then this post may not apply to you.

So all of these mandates have associated fees, but please note that those fees are charged by a merchant’s Merchant Account Provider or acquirer, and are not charged by Authorize.Net. Merchants need to contact their Merchant Account Provider or acquirer to obtain fee details.

The following is a brief description of each mandate followed by a listing of when Authorize.Net will support the mandates with each processor. It’s important to note that Authorize.Net is dependent on each processor's readiness to fully support the mandates. And though it may go without saying, I’ll say it anyway: All Visa mandates are applicable only to Visa transactions.

Zero ($0) Dollar Account Verification / $0 Authorization
Any merchant currently processing $0.01 (or any other low amount) authorizations as a means of verifying a Visa card are now permitted to process a zero ($0) dollar account verification request (a.k.a a $0 authorization). Zero dollar authorizations provide merchants with an effective means of validating account numbers and other authentication elements such as CCV and AVS.

• Merchants will be charged an Account Verification Fee for each $0 authorization.
• The fee applies only to transactions processed by U.S.-based merchants and does not apply to partial or full authorization reversals.
• Merchants that process $0.01 or other low amount authorizations as a means of validating a card, run the risk of being assessed a “Misuse of Authorization System” fee by Visa (more information below).

Zero Floor Limit
Visa requires that all transactions submitted for clearing (capture or settlement) be properly authorized, regardless of the amount. The “Floor Limit” is the smallest amount a merchant may accept payment for without obtaining an authorization. By specifying a zero floor limit, Visa is saying that all transactions must be properly authorized, no matter how small.

• Visa recently instituted a Zero Floor Limit fee for each transaction submitted for clearing that did not receive a proper authorization (including authorization code).
• This fee applies only to transactions processed by U.S.-based merchants.

Misuse of Authorization System
Visa requires all authorization transactions to be followed by a clearing (capture or settlement) transaction or, in the case of a cancelled order, for the authorization to be fully reversed.

• Visa is now charging a fee for each authorization transaction that is not followed by a clearing transaction. In the case of a cancelled order, the transaction must be fully reversed within 72 hours.
• The fee applies only to transactions processed by U.S.-based merchants and does not apply to partial or full authorization reversals.
• Merchants submitting low-amount authorizations as a means of verifying card data may be charged a fee. Merchants should instead be submitting zero dollar authorizations as specified above.

Authorize.Net Mandate Support

As a reminder, Authorize.Net is dependent on each processor's readiness to fully support the mandates. As such, the support dates listed below may change. Once support has been added for the processors above, we will announce it here on the community.

Currently, Authorize.Net supports $0 authorizations and full authorization reversals for Visa transactions submitted through the Chase Paymentech Tampa platform. We also support full reversals on the TSYS platform.

By November 1, 2009, we are planning to support both $0 authorizations as well as full authorization reversals with the following processors (any exceptions are listed next to the processor):

• TSYS
• Global Payments (GPN)
• Elavon
• First Data Nashville - Full authorization reversals only. First Data Nashville has no plans to support $0 authorizations with Authorize.Net.

Additionally, by the end of Q1 2010, we are planning to support both $0 authorizations and full authorization reversals with the following processors:

• RBS WorldPay
• CardWorks Processing
• Heartland
• First Data Omaha

We have no plans to support the mandates with the First Data EFSNet platform as this is a legacy First Data platform. If your merchant processes with First Data EFSNet and needs the ability to process $0 authorizations or full authorization reversals, your merchant will want to contact their Merchant Account Provider for information on changing processors.

If your merchants need to know how to find out who their processor is, tell them to log into the Merchant Interface at https://account.authorize.net and click Merchant Profile under Account in the main menu on the left. Their processor is listed under the Payment Methods section.

Visa Mandates and the Customer Information Manager (CIM)
Currently, CIM provides the option of performing an authorization for account verification purposes before creating a customer profile. The authorization amount that is automatically submitted is $0.01. To ensure that you comply with the new Visa mandates, we are modifying this functionality as follows:

• If your merchant is performing account verification using the CIM API, once the merchant’s processor supports $0 authorizations (see the timeline above for when that will be), the API will use a $0 authorization instead of the $0.01 authorization it previously used. It will not be necessary to do a full authorization reversal.
• If your merchant is performing account verification using the CIM API, but the merchant’s processor only plans to support full authorization reversals, the API will submit a $0.01 authorization, and then Authorize.Net will automatically initiate a full authorization reversal on the merchant’s behalf. This will be applicable to all merchants on the First Data Nashville platform.
• If your merchant is performing account verification using the CIM API, but the merchant’s processor does not support $0 authorizations or full authorization reversals, the API will submit a $0.01 authorization as usual and there will be no full authorization reversal. This means that if the merchant’s processor does not support the Visa mandates, or your merchant performs $0.01 authorizations before their processor is ready to support the mandates, the merchant’s Merchant Account Provider could charge the associated Visa mandate fees.

One last item to note, if your merchant is using CIM along with the Fraud Detection Suite (FDS) or the Advanced Fraud Detection Suite (AFDS), once the merchant's processor supports $0 authorizations, your merchant may want to reconfigure their Amount Filter to set a lower limit of $0, so that CIM verification transactions do not trigger that filter.

Whew! Ok I’m done now.

Michelle
Developer Community Manager