OK, SOMEONE out there has some explaining to do. Like, right now.  Who poked MasterCard hard enough to wake them from hibernation?

When it comes to actions against merchants, MasterCard has typically been much quieter than Visa.   We’ve had several customers come to us with new fines from MasterCard that will begin sometime in the next 18-21 months beginning NOW.

Grrrrr, by Ingorrr

Grrrrr, by Ingorrr

Why the ambiguity?  None of our customers seem to have a date when the fines start!  This is a huge assumption here, but I will suggest that the fines would start after the 2010 deadlines for Level 1 & 2 merchants.

Revisiting those deadlines, Level 1 & 2 merchants must produce a Report on Compliance from a QSA by December 31, 2010.  Non-compliant Level 1 & 2 Visa merchants are currently being fined under the Visa Compliance Acceleration Program (CAP) as follows:

  • Level 1 Merchant: $25K/mo ($300K/yr) plus tiered merchants bumping down one tier (total $$$ unknown)
  • Level 2 Merchant: $5K/mo ($60K/yr)

MasterCard traditionally fined post-breach, and in some cases we learned that MasterCard would fine merchants small, but consistent amounts to get the attention of accountants and finance gurus inside the company.  But, since someone poked the bear, now here’s what we have learned is coming to Level 1, 2, and 3 MasterCard merchants.

Level 1 & 2 merchants will be treated the same.  We already know they are the same from the new reporting and validation requirements, but they will also be the same from a fine perspective!  Level 3 merchants, currently NOT fined by Visa, will also be subject to fines (though in a much smaller amount than Levels 1&2).  My understanding (though their appears to be some question about this) is that these fines are assessed quarterly until compliant1.

  • Level 1 & 2: $25K, $50K, $100K, $200K ($375K/yr)
  • Level 3: $10K, $20K, $40K, $80K ($150K/yr)

So Level 1 merchants are being fined, at most, $75K more from MasterCard than from Visa (unless they are subject to tiered interchange), and Level 2 merchants are being fined a whopping $315K MORE from MasterCard.  If your company is actually made up of multiple Level 2 retailers, this potentially means that you could owe double, triple, or more!

MasterCard rolled out another change to acquirers as well, and require newly boarded Level 1 & 2 merchants to provide a compliant ROC from a QSA before they are allowed into the network.  So those Level 2 merchants that have been changing processors every year, it finally caught up to ya!

None of this information is published on the MasterCard SDP website, nor was I able to get this information directly from MasterCard, so your best bet is to contact your acquiring bank to understand how this new policy from MasterCard will affect your business.

This post originally appeared on BrandenWilliams.com.

  1. OK smart guy, I know what you are thinking.  What happens in Quarter 5?!?  Again, this seems a bit unclear but it appears that the fines reset to the lowest amount and continue their normal escalating procedure []