Mastercard and Discover recently announced new rules concerning how merchants process, handle, and refund debit cards, pre-paid cards, and gift cards. Discover has issued a date of April 16, 2010, and Mastercard set the deadline to May 1, 2010. We’ve received a number of emails from our merchants concerning these new rules…

For merchants using Authorize.net payment gateway

Authorize.net has worked out a deal where these requirements will not be required until June 30, 2011. In fact, Auth.net has not yet implemented functionality to support these new features. Merchants (and developers / carts that hook into Auth.net) have over a year to implement these new rules.

Authorize.net’s MasterCard/Discover Partial Authorization FAQ has complete details about these new rules.

What are the new requirements?

• 1. Balance Response
  Merchants must provide a balance left on debit, pre-paid, or gift cards via a web page or printed/emailed receipt. (Note: checking account balances will not be returned, only those on pre-paid / gift cards.)

• 2. Partial Approval
  Merchants should provide an approval of a partial amount if the total amount exceeds the balance on a debit, pre-paid, or gift card, and provide means for submitting another form of payment to complete the full transaction.

• 3. Authorization Reversal
  Merchants must reverse the charge if the customer decides they do not want to complete the transaction when their balance is exceeded. This immediately frees up the funds that were partially charged.

Are all merchants included?

If you sell online, then you are required to comply with these new rules. The only exceptions are:

• Merchants that process charges solely via batch uploads

• Mail Order / Telephone Order Exclusively

• Recurring payment transactions

What about payment gateways besides Auth.net?

PayPal has announced they will support these new features, but they do not have a timetable.

If you use another gateway, you will want to check with them directly for their timetable. Or post a comment below with details from other providers.

Has ShopSite ® addressed this?

Yes, ShopSite has plans to implement these new features once the various gateways finalize their support for them. ShopSite has a Knowledge Base article detailing their plans.

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The bottom line is… Details on full implementation by the gateways and ecommerce applications are still a “work in progress”. With the actual deadline being pushed back to June 2011, there is plenty of time for this to get ironed out and automated.

My take: The new rules are a good thing for pre-paid / gift card holders, as they can now easily see their balances, be given a choice to complete a purchase that exceeds the balance available, and lets them back out of a large purchase and remove an item or two from the cart to be able to complete the purchase. The rules will hopefully be a plus for merchants, facilitating more purchases in the long run.

Your thoughts?