Mastercard Installments (MCI): The New Mastercard BNPL Program
Julie Fergerson, CPFPP
CEO at MRC | Global non-profit membership association for payment and fraud professionals | The GO-TO place for eCommerce payment and fraud professionals globally to facilitate networking, education and advocacy.
Earlier this week I got the opportunity to sit down and talk to the Mastercard Installments team and get a great understanding of how it works. It was announced a while ago, but I do not think the merchant industry really heard the words, "all merchants are opt-in" into this program. It is slowly rolling out across the US this year with increased volume expected in early 2023.
I took a moment to write up my questions and the answers I received.
How does this work?
?A lender – for example, a bank, fintech, or BNPL provider - offers a consumer a loan under terms agreed to in an installment loan agreement. Depending on the lender, the installment payment plans offered could vary. For example: pay in four installments, every two weeks, or longer terms with different frequencies.
With each installment loan, the consumer is given a one-time use virtual card number they can use for the purchase; this card number can be displayed to the consumer, or it can be loaded into a consumer’s digital wallet for use.
The consumer then makes the purchase, as they normally would at any store. The transaction will pay the merchant in full, but the consumer will be charged in installments that they agreed to when they initially set up the installment plan.
?Are merchants automatically enrolled (opted in) to this program?
Yes, all merchants are automatically enrolled in this program. No technical work is required.
Please check with your acquirer on your DBA name. This is the name that might be displayed to consumers.
Will these transactions add extra cost?
Yes, the fees are competitive and value-based. Please contact your Payment Service Provider (PSP) or Acquirer to ask about specific fees.
When will these transactions be funded to a merchant?
The merchant will receive payment in full for the order as they usually do, right up front.
What if a consumer doesn’t make all their installment payments?
The lender will own the risk and loss. This will not impact the merchant in any way.
Can a merchant opt out of this program?
Yes, a merchant may opt out of this program by contacting their acquirer or PSP.
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Merchants should carefully consider the decision to opt out before doing so.
Lenders will communicate acceptance restrictions to consumers to prevent transactions at merchants that have opted out of the program, and Mastercard will decline the transaction if it were to be presented. Further communication to the consumer might be triggered to avoid customer service calls.
What happens if a merchant opts out and a consumer tries to make a purchase?
The transaction will be declined as “Do Not Honor 05” with a merchant advice code of 22.
Can a merchant tell if the transaction is a Mastercard Installment transaction?
Yes, the Mastercard Installments transaction will have unique BINs associated with the one-time use card numbers. The simplified bin table from Mastercard can be downloaded here. https://www.mastercard.us/en-us/business/issuers/get-support/simplified-bin-account-range-table.html
Product codes used: ETA, ETB, ETC, ETD, ETE, ETF, ETG, SPP, SPS
When will transactions start happening?
In the US, lenders will be ready later this year, so you should expect to see transactions this year in the US market. Other markets will follow.
Can the consumer use this virtual card number for multiple transactions?
The consumer may only use this card number one time. It will only work for one consumer-initiated transaction, but it will work with split shipment charges (merchant-initiated transaction).
What if a consumer tries to use this payment method for recurring transactions?
These transactions will be declined. This one-time use virtual card number will not support recurring transactions.
How will refunds, chargebacks and disputes be handled?
They will be handled the same way traditional card transactions are handled.?Business as usual.
Can a merchant become a lender and take on the risk and liability of the consumer payment?
Yes, but a merchant would need to fulfill the program requirements to be a lender – including proper licensing, among others.
Payments Advisory Board Member
2 年This is GREAT info Julie. Thanks for posting!
Award-Winning Cyberfraud Expert; Ecommerce Fraud Prevention Consultant; Chargeback Geek; Host of the Fraudology Podcast; Startup Advisor; Keynote Speaker; Consultant to Fortune 500 merchants
2 年Thanks for compiling this additional information, Julie! Even just understanding the UX for this payment method & that individual lenders will be making these offers is more information than we had previously. One big question I have is around chargebacks (of course :). How many CBs will be received by a merchant for MC installment purchases? Since the merchant is paid in full by the issuer, if a fraud chargeback came through, I think you're saying it would be one chargeback for the full amount? That would be better than 4 chargebacks for 4 installment payments, of course.? But, for fraud CBs on this payment method, will the funds go back to the lender since there isn't really a CH? If funds that are charged back to merchants do go back to the lender and not the cardholder (as they would in traditional card fraud cases), that leads me to wonder: if the lender authorizes the transaction to the consumer on a one-on-one basis, why would the merchant be held liable for approving the transaction? This should be like ID theft for card issuers, and not CNP card fraud, right? Shouldn't verifying the identity of the person who is using the one-off virtual card for installment payments reside with the lender and not the merchant?
I help merchants fight friendly fraud with Visa Compelling Evidence 3.0 and our new FraudDeflect Platform
2 年Julie, great post. I've found BNPL especially with the card brands jumping in, very interesting since its not new. This type of thing has been around in South America for as long as I've been traveling there (10+ years). It's very common and expected. The rules around these transactions and how the acquirers and PSPs handle it will be something to see.
Payments @GoDaddy | ex-Amazon ex-PayPal
2 年Thank you for this Julie. As a merchant I’m not a fan of virtual cards as they are tough on rules based systems. I’m curious of the customer experience since the UX resides on MasterCard side.