“2015: Year of Change” keeps living up to its billing.
Amongst all the chatter and conversation about EMV, Chip cards, NFC and ApplePay, along comes MasterCard with an announcement that could create even more serious churn in the credit card authorization world.
As most people know, MasterCard account numbers always start with 5 (Visa with 4, American Express 3 and Discover 6), but that is about to change. MasterCard announced it is going to start issuing cards that start with a “2” – in addition to the current cards that start with the standard 5.
This may seem like a very small issue until you realize all of the places where digital systems have been developed to recognize a MasterCard based on the first digit of 5.
One of the big issues surrounding this change involves the programming inside your standalone credit card terminal. Within that “box” is programming that prevents a card that doesn’t start with a 3, 4, 5 or 6 from being processed.
To correct this and allow the terminal to process a card starting with 2, you must write new code that opens the BIN range. BINs (Bank Identification Numbers) are the first 6 digits of the Visa or MasterCard and are used to identify the bank that issued the card.
This change is critical in the processing of the card, because those numbers also identify the type of card the customer is using (rewards, debit, business), which drives the interchange rate the merchant pays for accepting that card.
The major problem that will surface because of the MasterCard change is that many terminals in play today are “legacy” devices, which is a polite way of saying they aren’t being supported any longer by their manufacturer.
This means that the merchant who is using one of these machines will face even more pressure to upgrade to a new terminal. The new MasterCards, once they work their way into consumers’ wallets, won’t work in those stores still using legacy terminals.
Legacy machines usually continue to work fine, but they simply can’t be upgraded. Because some of these terminals last a very long time in the relatively low impact use within most retail stores, they keep on working long after new systems have evolved to handle transactions.
Much like the late 1990s, when the industry started issuing cards with a 00 expiration date and we discovered that the terminals regarded those cards as expiring in 1900, instead of 2000, we will see a dramatic surge of retailers upgrading to new terminals because of MasterCard’s announcement.
If you have recently upgraded to a terminal that can accept contactless or EMV transactions, your terminal should be able to accept the new download that enables it to process the new MasterCards.
If you have been delaying the decision to upgrade your systems for EMV, ApplePay or contactless transactions, you will want to reconsider that delay in light of this MasterCard development.
As always, if you have questions about this or any other issue involving merchant processing, please don’t hesitate to contact our expert customer service team at Michigan Retailers Association.
John Mayleben CPP is Michigan Retailers Association senior vice president, technology and product development, and a national expert on electronic payment processing. He was the first person in Michigan and among the first in the nation to receive the Certified Payments Professional designation from the Electronic Transactions Association.