October 2020 Card Association Updates

In October 2020, a series of updates from Visa and Discover will take place. In this article, we will take a look at some of the key upcoming changes.


Authorization Response Messages

From October 16 2020, the Field 44.1 (Response Source/ Reason Code) of authorization response messages will be replaced from the current value of a space to the value of “V”. The “V” will be used to indicate that the item was authorized online, either by an issuer or by Visa on behalf of an issuer.

B2B Virtual Payments Program

The Visa B2B Virtual Payments Program provides online travel agencies/service providers/payment providers with the ability to use virtual accounts. This program currently has a single interchange fee program- the Global B2B Virtual Payments Fee Program. Effective October 1 , Visa will be introducing a new interchange fee program and variable rates, both of which will be dependent on agreements between issuers and program participants. The B2B Virtual Payments Program will also be expanded to include deferred debit* and prepaid card products, and both existing and new interchange fee programs will be eligible for these new card products.*only issued in Europe.

Consumer Credit Merchant Segment Incentive

Visa’s Retail 2 Program will be eliminated, and new interchange rates for Insurance, Services, Education, Healthcare, Real Estate, and Advertising will be introduced. In addition, the Services interchange rates will feature a minimum ticket size qualification, meaning that the incentive interchange rate is only available for transactions of $100 or greater. The ticket size qualification for Education, Healthcare, and Real Estate transactions will be for transactions of $500 or greater.The new ticket size qualifications that are being introduced are designed to benefit higher ticket transactions from these sectors. As a provider specialized in the Education, Healthcare, and Retail sectors, Payscout can help you take advantage of these upcoming interchange rate changes.

Consumer CNP Interchange

The interchange rate name for CPS-qualified card-not-present transactions will also be modified to “Product 1”. Additionally, card-not-present interchange rates will be increased, meaning that transactions made online or over the phone will incur greater fees.For those in the Accounts Receivable Management (ARM) sector who take payments online or over the phone, these upcoming fee increases mean that now is the best time to implement a convenience fee model, in order to avoid increased costs to your business. As the only fully-compliant solution in the ARM industry, Payscout’s convenience fee model can help businesses offset these fees while ensuring full compliance.


PSL- E-Commerce U.S. Consumer Interchange Fee Program

A tolerance level validation test will be introduced to the program and will require the transaction amount at authorization compared to the transaction amount at clearing/settlement to be within the tolerance levels set by Discover. The tolerance levels will be dependent on MCC (Merchant Category Code), and have been outlined in the table below. Note: CNP and e-Commerce partial shipment transactions are exempt from the validation tests.

MCC (Tolerance Level)

4121 Taxi Cabs/Limousines (+/- 20%)

7230 Beauty/Barber Shops (+/- 20%)

3000-3350, 4111, 4112, 4131, 4411, 4511 Passenger Transport (Exempt)

3351-3441, 7512,7513, 7519 Car Rentals (Exempt)

3501-3999,7011, 7012 Hotels (Exempt)

5541 Service Stations (Exempt)

5542 Automated Fuel Dispensers (Exempt)

5812 Eating Places/Restaurants (Exempt)

5813 Drinking Places (Alcoholic Beverages) (Exempt)

5814 Fast Food Restaurants (Exempt)

5815-5818 Digital Goods (Exempt)

All other MCC’s (+/- 10%)

To learn more about how to better prepare your business to take advantage of these upcoming changes, contact sales@payscout.com.

Let’s get your payment processing on the right track.

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