Guiding you through PSD2

The following are the main exemption categories which can be applied by Elavon and/or the issuer:

1. Low Value Exemption

Remote transactions up to €30 (or equivalent in other currencies) and contactless transactions up to €50 (or equivalent in other currencies) do not require SCA up to a maximum of five consecutive transactions or a cumulative limit of €100 (€150 for contactless). If the cardholder initiates more than five consecutive low value payments, or if the total payments value exceed €100 (€150 for contactless), SCA will be required. Please note that currently, only Visa and Mastercard have released their requirements to support exemptions. The monitoring of the consecutive transactions and cumulative limits will be the responsibility of the issuer.

2. Recurring Payment Exemption

Some transaction types are initiated without the cardholder being present or in-session. In these cases, SCA cannot be performed and there are exemptions designed to accommodate these flows. In the case of recurring transactions (same amount) or other customer initiated transactions (variable amount), the initial capture of card details for storing on file must be authenticated using SCA – this results in a unique identifier that is used in subsequent transactions within a series to indicate to issuers that SCA has already been performed. To ensure that these transactions are exempted from

SCA step-up requests, customers and their service providers must ensure that the card scheme MIT

frameworks are followed and that all transactions are appropriately flagged as recurring with reference to the original transaction via the trace/transaction ID value.

3. Transaction Risk Analysis (TRA) Exemption

Issuers and acquirers’ may use TRA on customer’s partners’ behalf to exempt transactions from the need to have SCA performed. This effectively means that Elavon would analyse the transaction to determine the likelihood of it being genuinely performed by the cardholder and exempt it from 3DS. TRA will be available via two channels. Elavon will offer its own TRA service where Elavon will analyse transactions to determine if the transaction can be exempted from cardholder authentication. In addition Elavon will support TRA conducted by approved third parties. Further details on both services will be made available in due course. The issuer however will always have the final say, so for example, where Elavon were to apply the TRA exemption on our customers/partners’ behalf, the issuer retains the right to require SCA (known as step-up). The rules around TRA exemptions are complex and Elavon can only control how the transaction is handled up until the point that it is sent to the issuer. There are three threshold levels of exceptions – €100, €250 and €500. Elavon will be providing more guidance on TRA in the coming months.

4. Trusted Payee Exemption (or whitelisting)

With later levels of 3DS, cardholders will have the option to whitelist’ a business they trust with their card issuer. This means that the cardholder can elect to make a business a‘trusted payee’ and therefore transactions at a ‘whitelisted’ business are to be exempt from future SCA. Whether a cardholder’s elected wishes are upheld is totally the decision of their issuer, as the card issuer may reject the initial request or subsequent exemption requests if it has cause to do so. Furthermore, it is not known at this stage whether issuers will be ready to support whitelisting by 14 September 2019. Elavon are staying very close to developments regarding the Trusted Payee Exemption and will keep our customers/partners’ informed of the latest situation regarding this exemption category as they develop. It should be noted that a business (or their acquirer) cannot elect to be whitelisted themselves, this can only be done between the cardholder and their issuer.

5. Secure Corporate Payments

Payments made through dedicated corporate processes and protocols (e.g. lodge cards, central travel accounts and virtual cards) which are initiated by business entities, not available to cardholders and which already offer high levels of protection from fraud may be exempted from SCA. Elavon is working closely with the card schemes to understand the determination of these transactions and will inform customers/partners once it becomes available.

We expect that card issuers may decide to ask for extra confirmation through the use of voice referrals or an immediate refusal of the transaction. The transaction types currently not supporting the SCA functionality that are most at risk are:

• 3DS1 transactions (where the issuer is only supporting 3DS2)
• Magstripe transactions
• Keyed customer present transactions
• Non-authorised transactions
• Chip fall back
• Deferred authorisations (non-Chip and PIN transactions)
• Unauthenticated eCommerce transactions

References the articles of the Regulatory Technical Standards (RTS) published by the European Bank Authority.

Merchant Initiated Transactions (MIT)

Merchant Initiated Transactions are payments initiated by the customer without the interaction of

the cardholder, for example:

• A single transaction, such as a cancellation fee
• Recurring payments for fixed or variable amounts such as a monthly membership subscription
• A series of transactions for a variable amount or at variable intervals – such as irregular payment instalments for a holiday, or a regular but variable amount such as a utility bill

These transactions must be governed by an agreement between the cardholder and customer that, once agreed, allows the customer to initiate subsequent payments without any direct involvement of the cardholder However, SCA should be applied to the first transaction/action mandating the customer to initiate payment.

Mail Order/Telephone Order (MOTO)

MOTO transactions are not in scope for SCA, as the customer is not in the flow. However, there is a growing trend of fraud and chargebacks on MOTO transactions, and Elavon strongly recommend trying to find ways of taking transactions via eCommerce – perhaps using a Pay by Link type functionality.

MOTO should only be used where the cardholder details have been provided via mail or phone and is not intended to cover customer present interactions via eCommerce or keyed transactions.

Anonymous Transactions

Due to their very nature, payments made through the use of an anonymous payment instrument, such as anonymous prepaid, for example, gift cards, are not subject to the obligation of SCA.

Unattended Transport and Parking Terminals

Any payment for transport fares or parking at unattended terminals (e.g. at an airport or train station) will not require SCA.

One Leg Out Transactions

It may not be possible to apply SCA to a transaction where the Issuer is located outside the EEA1 and is therefore considered out of scope of SCA. SCA should be applied to these transactions on a ‘best effort’ basis.

Since the introduction of PSD2 we have been actively monitoring approval rates to identify any impacts to your business.

We notice that some banks have started to decline or ‘step-up’ contactless payments that require strong customer authentication (SCA).  This happens after a customer has made five contactless payments in a row (or once the payments have totaled €150).  The card will decline and the customer will be asked to insert their card in the machine and enter their PIN. If the transaction is still declined, advise the cardholder to contact their bank and request another payment method in that instance. 

Checkout our ‘Practical Impact Guide for Face to Face’ to assist you through this transition period.

EMV 3D Secure is the standard protocol for SCA when accepting payments over the internet.  It helps to reduce fraud and cart abandonment, whilst seamlessly supplementing existing data with additional information.

Upgrading to the latest version will allow you more flexibility as the merchant.  As well as providing the traditional shift in liability expected when applying EMV 3D Secure.

Once you commence using EMV 3D Secure for authentication (provided that the liability shift date for your region is in effect) there is minimal risk of chargeback to your business.

Activation dates for liability shift are variable based on network and geographical region.  Check with your gateway provider on the dates for your region.