Mastercard Processing Integrity Fee
The Mastercard Processing Integrity Fee is an “assessment fee” charged by Mastercard to encourage businesses to adhere to correct authorization standards for transactions. The amount and criteria for the fee vary depending on specific circumstances, which we’ll explain in detail below.
- Processing Integrity Fee Summary
- Mastercard Assessment Fees
- Processing Integrity Fee in Detail
- Locating the Processing Integrity Fee on Statements
- Lowering Your Mastercard Acceptance Costs
Processing Integrity Fees Summary
As of 2018, the Processing Integrity Fees are as follows:
- Processing Integrity Fee (Pre-Authorization, Undefined Authorization): $0.045
- Processing Integrity Fee (Final Authorization):25% of the transaction, minimum $0.04.
- Processing Integrity Fee (No Reversal): $0.055
Don’t worry if this doesn’t make sense yet; the remainder of this article will explain when these fees would apply.
Mastercard Assessment Fees
Part of total credit card processing costs, Mastercard assessment fees are charges imposed by Mastercard in order for the company to make money. Every business that accepts credit cards pays assessment fees through their credit card processing company. The Processing Integrity Fee is one assessment that Mastercard charges.
However, unlike other assessment fees that apply any time you accept a credit card, the Processing Integrity Fee only applies in specific instances. In effect, it serves as a penalty fee for failing to meet Mastercard’s transaction authorization standards.
Processing Integrity Fee in Detail
There are several possible scenarios under which you may be charged a Processing Integrity Fee, but first it’s important to understand Mastercard’s authorization definitions. Mastercard has three authorization types: pre-authorization, final authorization, and undefined authorization.
The card brand has introduced timelines for clearing or reversing transactions depending on authorization type, and charges the Processing Integrity Fee to enforce the rules. Each type of authorization has a corresponding Processing Integrity Fee that will be charged if the rules for the authorization type aren’t met.
A pre-authorization is a transaction where a business requests an authorization for an estimated amount where the final amount of the transaction is unknown. Common scenarios for pre-auths include car rental, restaurants that accept tips, and hotels accepting cards to secure a booking.
With a pre-authorization, the authorization amount must be greater than $0, and the authorization must be submitted for settlement within 30 calendar days. Authorizations that aren’t captured (or ‘batched’) must be reversed to avoid incurring a Processing Integrity Fee.
The pre-authorization Processing Integrity Fee is set at $0.045 per incorrectly authorized transaction.
A final authorization is a transaction where a business requests an authorization for a known, final amount. Most “card-present” transactions such as purchases in a retail store utilize this type of authorization.
With a final authorization, the authorization amount must be greater than $0 and must be submitted for settlement (or reversed) within 7 calendar days. Additionally, the authorized amount should equal the final clearing amount, and the authorized currency code should match the clearing currency code.
Final authorization transactions that don’t meet Mastercard’s criteria will incur the Processing Integrity Fee: Final Authorization. As of 2018, the Final Authorization Processing Integrity Fee is set at 0.25% of the transaction amount, with a minimum charge of $0.04.
An undefined authorization is a transaction where a business requests an authorization for an amount that may be different in the final transaction, and isn’t marked as another authorization type. The authorization amount must be greater than $0, and must be submitted for settlement within 7 calendar days. Authorizations that are not captured (batched) should be reversed or a Processing Integrity Fee will apply. Mastercard is working to limit undefined authorizations, and some processors will automatically assign an authorization type to transactions to avoid the undefined authorization tag.
The undefined authorization fee is currently set at $0.045.
In addition to the specific rules noted above, authorizations must be reversed within 24 hours for cancelled transactions or for transactions where the final amount is lower than the authorized amount. A “no reversal” Processing Integrity Fee of $0.055 will be applied when an authorization transaction can’t be matched to a settlement record after 120 days.
Locating the Processing Integrity Fee on Statements
On interchange plus and tiered pricing models, the Processing Integrity Fee will be listed with your other Mastercard assessment fees. Remember that you may not see a Processing Integrity Fee on all statements, or even any of your statements – the fee is only charged if your transactions aren’t meeting Mastercard’s authorization requirements as detailed in this article.
It's also worth noting that the Processing Integrity Fee may be abbreviated differently depending on the processor and even the fee itself. In the statement snippet below, there are two Processing Integrity Fees with different abbreviations, even though this is one monthly statement from a single processor.
In one line, it's partially abbreviated (Proc Integ) and specifies it's the fee for an undefined authorization. The other is even shorter, with PIF standing for Processing Integrity Fee and the notation that it's for final authorization issues.
Note that if you’re on a flat rate pricing model, you will not typically see assessments listed on your monthly processing statements. You’re still paying them, but they’re lumped together with all of your other costs, making it difficult to determine if you’re paying unnecessary fees.
If you do see Processing Integrity Fees regularly, you should work to eliminate the issues that cause the fee. CardFellow clients, please contact us for assistance.
Lowering Your Mastercard Acceptance Costs
Assessment fees are non-negotiable component of credit card processing costs, but that doesn’t mean you can’t lower your overall costs to take Mastercard. Many businesses can lower their costs by securing a more competitive markup from a processor.
Processor quote comparison services, like CardFellow’s, can help you find the best possible pricing for your business. If you think you’re overpaying to take credit cards, sign up for a free, no-obligation account with CardFellow to see what pricing you’re eligible for with multiple different companies. Try it today!