April and October are key months for changes in rules and fee structures by the major card brands. Earlier this year, many of the planned changes for April were postponed due to the coronavirus shut-down. Mastercard Transaction Integrity Class (TIC) for interchange rates is one of the new requirements that was delayed.
TIC is a method that Mastercard uses to evaluate a transaction’s fundamental security and to assess the validity of the card and the cardholder. The two-character TIC code was introduced in the authorization for all its POS purchases and cash-back purchases in the U.S. about four years ago.
Mastercard’s plan is to begin requiring the exact TIC code from the transaction authorization to be captured and included in the settlement process. If the TIC code is not passed during settlement, merchants’ interchange fees can increase anywhere from 50 to 100 basis points.
Mastercard did not name a new date for TIC compliance, but as we make our way closer to the month of October, it’s a good idea to prepare now. That way, there’ll be no surprises when Mastercard does require compliance.
Some systems already have this capture capability, but not all. To shield themselves from higher interchange rates, merchants need to be proactive by contacting their POS software provider and any other software vendor with integrated payments to confirm they are taking the necessary steps to ensure compliance.
We will continue to monitor the situation and provide updates as they unfold from Mastercard. In the meantime, it’s always better to be prepared for the mandate rather than caught off guard.