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Discover/Mastercard Prepaid Card Mandates Require Changes

MasterCard and Discover have announced mandates requiring all merchants who accept their prepaid card transactions to support partial authorizations, split tender transactions, real-time reversals and card account remaining/available balance printing on prepaid card transaction receipts. These prepaid cards are generally handled the same as other MasterCard/Discover transactions at the point of sale, so this potentially impacts everyone, and must be addressed by anyone who wants to accept these prepaid cards. It is not clear whether merchants will upgrade to be compliant when they understand the specifics. However, Datacap is making product enhancements required to support these features.

The intent of MasterCard and Discover Network is to provide better experiences for prepaid card users, and to hopefully expand prepaid card usage. Currently, if a prepaid card has insufficient funds to cover a purchase, the card is declined. Often the cardholder does not even know the card balance. Partial approvals will significantly decrease the number of prepaid card declines by approving transactions for the remaining balance, instead of declining them. Real-time reversals/voids immediately void the payment if the cardholder is unable to pay the remaining balance after a partial auth has been processed (and the associated partial payment completed). Printing the remaining/available card balance on the receipt will allow the cardholders to know their card balance for future reference.

Support for Partial Authorizations, Real-time Reversals and Account Balance Responses (and associated receipt printing) has been mandated by Discover Network effective April 16, 2010 and by MasterCard effective May 1, 2010. Most or all payment services state they will be ready to provide the mandated services on the effective dates, and are encouraging merchants to upgrade

At some point, non-compliant merchants may be subject to transaction downgrades. However, it appears that as of the effective dates, the result of non-compliance is that any MasterCard/Discover Prepaid transactions will be rejected/declined if the initiating POS System does not indicate on the transaction that it is compliant with this (partial auth) mandate. 

To be compliant, POS/ECR Developers need to make the changes to their POS/ECR applications and Datacap product interfaces to support these new requirements. Dealers/resellers will need to upgrade their customers who wish to accept Discover and MasterCard prepaid card transactions, and educate them on the operational differences of the upgraded systems.