Challenges faced when navigating card scheme requirements

If you’ve been working in retail this 2020, then it’s likely you’ve been able to take advantage of a genuinely global marketplace.

The power of digital communication and the potential of ecommerce as made it easy to sell to people thousands of miles away, as well as close to home, and this has helped to fuel the massive boom in online retail during the pandemic.

According to figures published by the OECD, retail sales in the 27 countries of the EU, via mail order houses or the internet, rose by 30% in April 2020 when compared to April 2019, against a backdrop of overall retail sales dropping by 17.9%.

The same pattern was seen in the US, where general retail and food services sales dropped by 7.7% year on year in the period between February and April 2020, while ecommerce sales for grocery stores rose by 16%.

In the UK, meanwhile, the share of ecommerce retail rose from 17.3% in the first quarter of 2018 to 20.3% in the first quarter of 2020. It then jumped further to 31.3% during the second quarter, as the impact of COVID restrictions started drastically changing consumer shopping habits.

These figures tell us two things. The first is that worldwide restrictions to slow the spread of the pandemic had the effect of turbo charging the switch to online retail.

The second is that this turbo charging was only an acceleration of a trend which was already firmly established, something which inevitably leads to the conclusion that the shift in consumer habits witnessed during 2020 is likely to become permanently embedded.

For your business to take full advantage of this shift you need to work with a payments partner capable of navigating the exceptional technicalities involved in selling between different geographical marketplaces. NOIRE offer everything you need from that payments partner.

We’ve written before about the range of compliance requirements needed in order to operate in various parts of the world, with a particular emphasis on emerging markets.

A payments partner with a firm grasp of these requirements, as well as the operating conditions in emerging and established markets, will ensure that any attempt to start trading in these markets is as seamless as possible.

One of the issues which businesses often struggle with, particularly when first striking out into new markets, is being able to offer the payment options which are popular within these markets. In the majority of cases, this begins with making sure that prospective customers have the option of paying using either Visa or MasterCard.

According to figures based on Google search data, MasterCard is the most searched for credit card company in 22 countries around the world, including Brazil, while Visa is even more popular, being the first card of choice in no less than 123 countries such as France, Germany and Japan.

Bolstering this perceived popularity is the fact that, in 2018, there were 336 million Visa credit cards circulating in the United States and 771 million around the rest of the world. At the same time, there were 231 million MasterCard credit cards in the United States and 644 million in the rest of the world.

Clearly, any merchant serious about engaging with the global marketplace will have to offer the option of these incredibly popular payment cards, but putting these options into place directly is hugely complicated by the complexity of the card scheme requirements.

When your payments systems are set up via NOIRE, on the other hand, you’re working with a trusted partner who understands the importance of keeping things as simple as possible.

We understand that have a business to run and that time spent painstakingly working through card scheme requirements is time which you are not able to dedicate to activity which impacts on your bottom line.

Unfortunately, for merchants who need to offer the widest possible range of payment options, the requirements and rules set by the card providers themselves stretch to four hundred and two pages in the case of MasterCard and eight hundred and ninety one pages for Visa!

While not all of these rules apply directly to merchants themselves – or at least not every type of merchant – the act of working through the extremely complex multiple sections of the guides is something which would represent a massive challenge, particularly to a sole trader or SME which lacks the resources to employ specialists to work through the rules on their behalf.

These are just a few of the requirements which any merchant wishing to accept payment cards will have to meet:

  • Obtain authority – for every occasion on which a cardholder’s account is debited, and should retain the evidence of that authority to present to the relevant bank or payment processor if required, in addition to documenting evidence of the products which were purchased having been dispatched.
  • Aware of no guarantee of payments – the acceptance of a cardholder not present at a transaction doesn’t guarantee payment from the bank or payment processor, even in cases in which authorisation has been granted by the card scheme or issuer.
  • Prohibited from applying any surcharge – intended to pay any or all of the card payment fees or merchant service charge, whether this extra payment is applied directly or indirectly, particularly if a similar charge doesn’t apply to other cards or payment methods.
  • Not to engage in practices which discriminate – in favour of, or against, the use of a specific card brand in favour of other brands or methods.
  • Card issuer reserves the right not to honour transactions – carried out by the merchant, and sales may become invalid for a range of reasons including:
    • The sale being split into two or more connected sales
    • The authenticity of the sale has been disputed, in writing, by the cardholder to the card issuer
    • A copy of the receipt has been requested in writing by the bank or payment processor and the merchant has failed to provide it within a reasonable time
    • Any receipt presented by the merchant to the bank or payment processor is incompatible with a copy provided by the cardholder
    • The transaction took place in a manner which violated the law or currency regulation as applied to cards in the particular country in which the transaction took place

These are just a few brief summaries of the kind of regulations which any merchant will have to adhere to if they wish to take payments using Visa or MasterCard credit cards.

In addition to understanding and meeting any of these requirements, the merchant in question will have to be aware that the rules imposed by the card payment schemes are updated on a regular basis, and any transactions will have to take account of these revisions.

Here at NOIRE, our business is to understand exactly what the rules and regulations are, so that you can get on with your business, and stay abreast of any changes – just like monitoring newly emerging payments methods or changes introduced by the state regulators in various countries.

NOIRE Keeps It Simple

We keep things simple for you so that you can concentrate on delivering the very best service for your customers. If you would like to know more about the simplicity, security and flexibility of NOIRE payment services, please get in touch with us today.