Why data integrity fees are increasing and how acquirers can avoid them
We are seeing more and more Mastercard transactions being assessed with the Data Integrity Fee, meaning data that is being sent in the clearing record does not completely match the data being sent in the authorisation record. Mastercard is keen to ensure their members are passing data correctly and accurately and as a result, we expect the network will continue to tighten their focus on data. This will lead to an increase in data integrity fees being assessed and an increase in declined transactions. Both being ways in which Mastercard will try to alter and improve the behaviour of their acquiring members.
What are data integrity fees?
Mastercard introduced its Processing Integrity Fee in 2011 as a way to monitor compliance to their authorization guidelines and ensure transaction details contain accurate and clean data. Also known as Data Integrity Fee, it applies to all Mastercard authorised transactions that are not followed by a matching Mastercard cleared (settled) transaction, or in the case of a cancelled transaction, not properly reversed.
What are the implications?
Mastercard charges $0.055 per item that does not follow the guidelines listed above. Additionally, declined transactions will increase by not sending the correct, matching data in both the authorization and clearing record. So not only is the sale potentially lost, but the acquirer could be assessed the Data Integrity Fee, which they will pass onto the merchant in question.
How to avoid this
Access to data, data and more data from the card networks, and then knowing how to apply this data to transactions. Many data integrity fees are caused by the EMV tag value being sent in the authorisation record is different than the value being sent in the clearing record.
Some are caused by submitted EMV values not being recognised due to the POS device being used is operating on older software and needs to be updated. Still others are caused due to errors made by the acquirer during the merchant onboarding set-up–these could include incorrect state code, incorrect zip code or null values in these data fields. When the clearing records are sent with the incorrect information there is a data discrepancy and the data integrity fee is assessed.
My recommendations
Acquirers, PSPs and PayFacs should be mindful that data sent in authorisation and clearing records should be consistent with card scheme specifications and regulations.
It is important to make sure that all merchant POS devices are updated to the latest version of software if possible.
Onboarding records should be audited to ensure that there is no incorrect and/or missing merchant data that could trigger a data discrepancy.
Acquirers, PSPs and PayFacs should work closely with their processing partners to ensure they are receiving as much data as can be passed.
These organisations should be adamant that they use a processing partner that is willing to work with them to research and assist with root causes of data integrity fees, as well as any other card networks fee or cost.
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About The Author
As Co-founder and CEO of Silverflow, Anne Willem is responsible for product and the overall commercial, financial and operational activities.
After finalizing his degree in Applied Physics, he joined the Amsterdam office of Bain & Company. He moved on to work in Private Equity where he was responsible for portfolio companies in the Netherlands and Germany. He gained experience in cards payments at Adyen, where he was part of the cards acquiring team.
About Silverflow
Silverflow is a global payments technology company, founded by online payments industry veterans, with the mission to accelerate technological innovation in the payments industry. Silverflow’s cloud-based platform provides a state-of-the-art upgrade and direct access to the card networks for payment services providers, merchants and acquirers. Its intuitive product and scalable technology provides value, creates efficiencies, and drives new opportunities for all. Based in Amsterdam, Silverflow is backed by Crane Venture Partners, INKEF Capital and notable angel investors from Pay.On, First Data, Booking.com, and Adyen.
Learn more: www.silverflow.co
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