Partial Payment Authorization Now in Effect
MasterCard and Discover have implemented rule changes that require merchants in the U.S. to support Partial Payment Authorization. Host Merchant Services is here to guide you through this change with a comprehensive explanation of what this means for you as a merchant.
A brief summary of the process is that when a debit card is swiped and has insufficient funds, transaction processing terminals will now prompt the merchant to accept a partial authorization. As a merchant you need to pay attention to this, and note the terminal’s prompt. You then need to confirm with the customer if they are capable of paying the remaining balance. If they can, you complete the partial transaction and then finish with a transaction for the remaining balance. If they can not, you need to reverse or void the charge. If that seems a bit complicated, don’t worry, here’s the entire process in detail, followed by further resources, including step by step guides to use this with specific terminals, that you can download and print out for your convenience.
What does Partial Authorization mean?
A Partial Authorization occurs when an authorization is attempted for the full amount of the transaction and there are not enough funds available to cover the full amount, so an authorization for the amount available in the account is returned. This allows the cardholder to use the card presented for the amount available and for the merchant to obtain an additional form of payment for the difference. For Prepaid Gift Cards, the issuers will also return a card balance which will be printed on the receipt.
What types of cards will partial authorizations occur on?
Partial Authorizations are primarily supported for debit cards (both Signature and PIN’d Debit) and Prepaid Card transactions since the issuers treat prepaid cards like debit cards. In some cases, Partial Authorizations are also supported for credit card transactions but the mandate addressed the debit and prepaid card transactions.
Are partial authorizations supported for all card brands/types?
MasterCard and Discover have mandated that acquirers support partial authorization transactions on debit and prepaid cards, where MasterCard has also defined specific merchant types that have to support partial authorizations and consumer requested reversals. Issuers still have the choice to return a partial authorization or reply with a decline. Because most POS devices can’t differentiate between card types and in order to simplify this mandate for our merchants, we have made the decision to include support for partial authorization transactions on all card types including Visa and AMEX.
Do the issuers have the same mandate?
No, issuers still have the choice to support partial authorization processing or to decline the debit/ prepaid transaction if funds are not available. If they support partial authorizations they must also support the partial authorization reversals.
What are Partial Authorization Reversals and when would they occur?
The MasterCard mandate requires that all merchants also support a consumer requested reversal. This transaction would be requested by the cardholder if they did not have another form of payment to pay for the difference between the original amount and the amount that was partially authorized. This could also be requested if the cardholder wanted to use another form of payment for the entire purchase.
For example, if the purchase was originally for $100, but the debit card only had a balance of $71.99, the issuer would respond with a partial authorization for $71.99. The merchant would inform the cardholder and request the difference of $28.01 through some other tender e.g. cash, check, another card. If the cardholder didn’t have $28.01 through another payment method OR wanted to reverse out the $71.99 to use another card for the $100, then they would request the merchant do a reversal for the partially authorized amount of $71.99.
When does this go into effect?
The actual mandate went into effect in 2010. We were granted an extension to implement this in October, 2011.
Continue Reading – Partial Authorization, Part 2