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MerchantAcceptance Policy

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V E R S I O N 1 . 8 N O V E M B E R 2 0 1 9

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Auction Houses

Art Dealers and Galleries

Cannabidiol (CBD)

Contact Lenses

Counselling Services

Cryptocurrency/Virtual Assets

Computer programming and other related services

Dating/Escort Services

Debt Collection

Discount Stores

Duplicate Applications

File Sharing Services (Cyber locking)

Furniture

Gambling and Casino

Insolvency Practitioner

Jewelry, Precious Stones and Metals

Lotto Syndicates

Money Remittance

Nutraceuticals/diet control substances

Organizations – Charitable Social Service/Religious/Political

Payday Loan

PPI (Payment Protection Insurance)

Real Estate Brokers/ Property Rentals

Skill Games

Subscription / Continuity Merchant / Negative Billing Option (free trail + recurring)

Taxi Cabs and Limousines

Ticket Agencies/Brokers

Travel Agency / Tour Operator

Tobacco Sellers – Cigars Stores and Stands

Work in Progress Policies

CONTENTS

AUCTION HOUSES

Brief description of the industry Auction House facilitates the buying and selling of settings such as Paintings,Work of Art or Collectibles. Conditions applicable -MCC 8999-As per this link, Auction Houses in the UK might need a license depending onthe area:https://www.gov.uk/auction-premises-registration-AML Policy mandatory-Certificate of Authenticity mandatory-Supplier Invoices or Agreement to verify that these are not replicas Geographic Restrictions/BIN Blocks applicable -No default blocking but case on case basis based on findings Risk Mitigation -Shipping Policy and Payment Page must include only the country ofregistration-Disable Refund ability

ART DEALERS AND GALLERIES

Brief description of the industry Art dealers on the other hand, sells only Work of Arts. Conditions applicable -MCC 5971-For Art Galleries or Dealers if the merchant wants to export the object alicense is required https://www.artscouncil.org.uk/sites/default/files/download-file/Guidance_for_exporters_issue_1_2016.pdf-AML Policy mandatory-Certificate of Authenticity mandatory-Supplier Invoices or Agreement to verify that these are not replicas Geographic Restrictions/BIN Blocks applicable -No default blocking but case on case basis based on findings Risk Mitigation -Only domestic is allowed for Art Galleries-Shipping Policy and Payment Page must include only the country ofregistration

CANNABIDIOL (CBD)

Brief description of the industry CBD (cannabidiol) is a non-psychoactive cannabinoid extract that can be takenfrom both marijuana plants and industrial hemp. CBD’s main difference frommarijuana is that it contains less than 0.2% THC, the active psychoactivechemical in marijuana. As such, users of CBD products can’t get high fromthem. Conditions applicable -- MCC 5499 Food Supplement - ECOM Only, MOTO not allowed - Chargeback ratio to be below 1% - CBD products will be acceptable only when THC is up to 0.2% - Any CBD products having more than 0.2% THC will be declined - Products that are used for medical purposes or require a prescription will bedecline - Every Product to have a full list of Ingredients specifically percentage rate ofTHC and Nicotine - When products include a percentage of Nicotine the Tobacco Policy willapply - Risk Warnings including side effects for consumers must be available on thewebsite - To request 3 to 6 months Transaction History for Companies being 1 year orabove in operation

CANNABIDIOL (CBD)Merchants considering targeting other Markets outside EU/EEA

- This is acceptable up to maximum 40% of the processed transactions

- Merchants must provide to STFS with a Legal Opinion. Legal opinion

provided by the Merchant must be escalated to STFS Legal Department for

verification.

- Legal opinion must include the following:

a. If the product does not require Novel Food authorization, explanation why it

does not require authorization by the Food and Safety Authority;

b. The product is sold NOT for medical purposes.

c. The product does NOT require a medical prescription from Pharmacist or

Doctor

d. Target Market/s and laws applies in relation to CBD for each Market.

e. Assurance that the product contains certain % of THC is legally sold in the

market/s being addressed

Geographic Restrictions/BIN Blocks applicable

- By default, the Gateway must block non-permitted EU/EEA jurisdictions listed

below. Please note that this list is subject to change in accordance to the

jurisdiction’s regulation:

• Austria

• Denmark

• Finland

• Malta

• Portugal

• Slovakia

CANNABIDIOL (CBD)

Risk Mitigation Measures:- To impose 10% for 130 working days for Start-up Companies - To impose 5% for 130 working days for companies being 1 year or above in operation POS Merchants Acceptable if • The company has good financials • It is not a start-up, shop has existed for some time • Sales Representative has physically visited • Merchant has trading history and/or is a reputable provider • Merchant has demonstrated they have a trustworthy setup by other means • Preferably receiving some photos of the products on sale If a Decline is decided the Sales Person does not have right to appeal. Version

CONTACT LENSES

Brief description of the industry Merchants classified under this sector sell Contact Lenses. Geographic Restrictions/BIN Blocks applicable - Block US BINs Risk Mitigation - Shipping to the US in the Delivery Policy is not acceptable

COUNSELLING SERVICES

Brief description of the industry Merchants classified with this MCC provide a variety of personal counseling services, such as debt and financial counseling, marriagecounseling, family counseling, and alcohol and drug abuse counseling. Conditions applicable- MCC 7277 - Underwriting Analyst has to check with Legal Department if the Counselling provider has to be registered in the jurisdiction they operate. Geographic Restrictions/BIN Blocks applicable- None Risk Mitigation - At Underwriter discretion

CRYPTOCURRENCY/VIRTUAL ASSETSBrief description of the industry Cryptocurrency is a digital currency built with cryptographic protocols that make transactions secure and difficult to fake. The European Banking Authority (EBA) defines virtual currencies as adigital representation of value that is neither issued by a central bank orpublic authority, nor necessarily attached to a legal tender. VCs areaccepted by natural or legal persons as a means of payment and can betransferred, stored or traded. Merchants in the Crypto space can fall under one of the followingmodels: 1. Exchanges – restricted 2. Mining - restricted 3. ICOs – prohibited as outside risk appetite. Conditions applicable to All Models:- MCC 6051 (Quasi Cash Merchant) - MasterCard - MRP Registration required ($500 annual fee) or any othercurrency equivalent - OCT not allowed - AML Policy and Procedure – mandatory disclosed - Flow of Funds – to be disclosed - 3D Secure MUST be applied on ALL crypto merchants as they are highlyand actively targeted by fraudsters.

CRYPTOCURRENCY/VIRTUAL ASSETSGeographic Restrictions/BIN Blocks applicable - Following countries MUST be blocked at the onboarding (list is valid atthe time of writing but can change anytime) ❖ China ❖ Vietnam ❖ Bolivia ❖ Colombia ❖ Ecuador ❖ Algeria ❖ Bangladesh ❖ Indonesia ❖ Jordan ❖ Kyrgyzstan ❖ Morocco ❖ Nepal ❖ Saudi Arabia ❖ Iran ❖ Pakistan ❖ Taiwan ❖ Cambodia

CRYPTOCURRENCY/VIRTUAL ASSETSScheme Requirement (Mastercard AN 1695 “RegulatoryMonitoring”) - If merchant is a licensed entity, a copy of the license must beprovided and uploaded on Investigate – document center. - If merchant is not regulated/licensed, the merchant must provide alegal opinion addressed to Secure Trading Financial Services ltd from areputable law firm located in the jurisdiction from where the non-licensedentity is operating to confirm that Merchant does not violate local laws.This legal opinion must be uploaded on Investigate – document center. Option 1 For 500 EUR one off fee or any other currency equivalent, STFS can offerits merchant the Certificate of Compliance offered by a reputable ServiceProvider to operate in Europe. This fee can be waived if the Merchantprovides us with a Compliance Certificate from an independent andreputable law firm situated in the operating country. AND For 100 EUR monthly fee or any other currency equivalent, STFS offer itsmerchant: - An updated Certificate of Compliance from the Independent Third Partyconfirming that the merchant demonstrates “effective controls” onoperating system so that they can continue processing in Europe.

CRYPTOCURRENCY/VIRTUAL ASSETSOption 2 In alternative to the One-off Fee of 500 EUR and Monthly Fee of 100 EUR,STFS can offer the monitoring for the effective controls and the Certificateof Compliance for a monthly fee of 195 EUR or other currency equivalent. STFS has the right to amend fee by providing 2-month notice (ChangeNotice). Merchant will be provided with a Certificate of Compliance issued by theIndividual Third Party. Definition of the various model and specific requirements ofacceptance: 1. Exchanges Model Under the Exchange model, for the moment, we can identify 3 broadtypes (others may emerge): a) Pure Exchanges: Merchants under this category represent ourpreferred business model and would typically provide a service throughwhich customers can buy cryptocurrency (funding part only). They mayrequest the customer to provide his/her own crypto wallet or they maycreate a new wallet for them. Ideally, we should get evidence that thecrypto currency was deposited in the wallet and get wallet ID. This wouldenable us to fight any chargebacks without relying on the merchant(covers us if merchants go bust or disappear). Depends on Omnipaybeing able to handle additional data elements.

CRYPTOCURRENCY/VIRTUAL ASSETSThis model is within our Risk Appetite.

This model should always be escalated to the Head of Underwriting for

acceptance.

The underwriter should always ask clarification on where the Crypto wallet

is held (Merchant level or Customer level). If at Merchant level in a pooled

Crypto wallet, additional collateral may be required. If customer level, we

need to know if customer can also import their own wallet or need to

create a new one.

b) Staged Digital Wallet (SDWO): This is an ‘exchange’ where a customer

can buy a crypto currency which would then be immediately encashed to

make a payment to a specific merchant (Closed loop). Essentially this is a

replacement of the old voucher systems. This is seen by the card schemes

as a way of bypassing legal or regulatory restrictions in certain industries.

It can also be interpreted as transaction laundering. SDWOs also require

registration with the card schemes.

This model is prohibited because of the additional Risk involved and

because of the capital requirements by the Card Schemes.

CRYPTOCURRENCY/VIRTUAL ASSETSc) Traders: These are typically operated purely as a replacement of the

old Binary Options or CFD (Contracts for Difference) models. With more

restrictions or prohibition being made by Regulators and by ESMA on the

binary & CFD models, these same operators are shifting to ‘trading’ in

crypto currencies but always applying the same hard selling techniques.

This model might be hard to identify. Sometimes they are also licensed

from Estonia.

This model can be considered but carry a very high Credit & Reputational

Risk.

Risk Mitigation Measures:

- Rolling Reserves and Delay settlement can be “negotiated” for Pure

Exchanges types of business only depending on the quality of the

merchant. The better-quality exchanges will push for better terms as the

above will affect their cash flow. If they are genuine business operating as

an exchange, they need the funds to buy the crypto currency on behalf of

their customer. Lowest we can accept which should also be doable for the

exchanges is 5% for 60 days and Weekly Settlement with No Delay or

Daily Settlement with 7-day delay.

- The standard conditions will apply for Traders without negotiation due to

the higher risk.

- Monthly Caps will be placed on the total volume that can be processed.

There will also be limits per card number.

CRYPTOCURRENCY/VIRTUAL ASSETS2. Crypto Mining Model

Merchants that deploy computer server farms that are constantly mining

crypto coins. They then offer a service through which customers can buy

capacity on these farms. Customers receive the crypto generated through

the processing capacity they have purchased.

Payments are usually made by credit/debit card for a fixed contract,

typically 2-5 years but sometimes even ‘lifetime’ contracts. Under the

lifetime contracts, mining will continue for as long as it is economically

viable to do so, i.e. as long as the value generated in crypto is more than

what the customer is paying.

Payment can be made monthly or upfront for fixed term contracts.

This model represents additional credit risk as the service is being

provided over a long period of time, which means that the chargeback

period is extended. These types of merchants are not very popular

anymore as mining becomes more expensive.

All the mining models are on our Restricted List and applications will be

reviewed individually.

CRYPTOCURRENCY/VIRTUAL ASSETSRisk Mitigation Measures:

- Higher Rolling Reserve and higher Delay in Settlement.

- Rolling Reserve – not less than 10% (ideally more) and number of days

will depend on type of mining contracts being sold by the merchant.

Settlement delay needs to be proportionate to the term of the contract

and the maximum liability determined by the card schemes, so may

stretch to 540 days.

- Settlement – Always Weekly settlement with 15-day delay

- Monthly Caps must be fixed together with transaction & Card Limits.

Other potential Checks:

- Endorsement from asic vendor

- Transparent public information ‘e.g how much hashrate sold vs stock’

- Reasonable referral programs and social network

- Contracts demonstrate easy exist

- Disclosure of contracts history of changes

3. Initial Coin Offering (ICO) Model

Typically, start-ups attempting to raise money through an initial coin

offering for some new project. Many times, only based on a white paper

prepared by the company itself, with no external validation or audit.

CRYPTOCURRENCY/VIRTUAL ASSETSCapital is typically collected via a choice or combination of the below:

▪ Through other crypto currencies

▪ Private placements

▪ Cards

Risk vs Return is not commensurate, there is extremely high credit &

reputational risk, low volumes and low return.

This model is outside of Risk Appetite

We might open to regulated ICOs once these appear on the market. Not

aware of any country licensing ICOs at this point.

COMPUTER PROGRAMMINGAND OTHER RELATED SERVICES

5045 Computers and Computer Peripheral Equipment and Software

5734 Computer Software Stores

7372 Computer Programming, Data Processing and Integrated

Systems Design Services

7379 Computer Maintenance, Repair and Services

4816 Computer Network/Information Services

Not acceptable for Startups

Established companies with positive processing history and positive

financials

Brief description of the industry

Merchants providing Computer related services can offer different

business models which may also involve recurring payments:

- Software

- Computer Repair

- Computer Devices

- Support

Conditions applicable

- Various MCCs may apply depending on the main area of the

Merchant. MCCs including:

- MOTO on case by case

COMPUTER PROGRAMMINGAND OTHER RELATED SERVICES

License Agreement is required OR

Reseller Agreement including authorization AND Invoices from the

Licensed Company OR

Valid IT Tech Certificate

Weekly Settlement

7 days funding delay days

Minimum Rolling Reserve of 5% for 60 days

- When the merchant is offering a Software


- None

Risk Mitigation

- Merchants processing recurring payments, or are a Startup: ▪ Default

Rolling Reserve of 10% for 180 days

- Merchants processing one offs (without recurring):

DATING/ESCORT SERVICES


Merchants that are classified under this business model provide websites

that allow individuals to connect through Online Dating and/or providing

Escort Services.


- MCC 7273

- ECOM Only

- Minimum 6 months Processing History is mandatory

- Dating: Subscription is allowed

- Escort: Subscription is not allowed

- Escort: Refund/Cancellation Policy must clearly state the process if for

any reasons there is a case of no-show ups.

- Escort: If the website shows any Logos for Hotels and/or Restaurants the

Agreement between the Merchant of Record and the specific

Hotel/Restaurant must be provided.

- If fake profiles are identified application will be declined

- The below is not acceptable: ▪ Startups

▪ Sex Solicitation

▪ Prostitution


- None

DATING/ESCORT SERVICES

Risk Mitigation

- Default Rolling Reserve of 10% for 180 days

- Weekly settlement cycle

- 7 days funding delay days

DEBT COLLECTION


Debt Recovery is when a Company acts on behalf of the creditor to

recoup the money owed by the debtor.

There are two types of ‘Debt Recovery’ models:

Model 1: Having an IVA (Individual Voluntary Arrangement) a formal, legal

debt solution with the creditors to pay off the debts over a set period. An

IVA must be set up by a qualified person, called an Insolvency Practitioner

(IP).

Model 2: In this case an IVA (Individual Voluntary Agreement) would not

be present.


- MCC 8999

- No Bailiffs services

- Debit Cards and prepaid cards only


- None

DEBT COLLECTION

Risk Mitigation

Where Model 2 is involved:

- For Startup Company a mandatory Rolling Reserve of 10% for 130

working days

- For Companies older than 1 year a mandatory RR of 5% for 130 working

days

DISCOUNT STORES


Merchants under this category provide discounts to various products and

services provided by different retailers. This applies only for low risk

merchants.


- MCC 5310

- ECOM Only

- Duration of the Voucher must be clearly stated on the Website

- List of Retailers must be provided therefore ‘closed loop’ only

acceptable

- 3 Sample Agreements between the Merchant of Record and Retailers

must be provided

- Recurring is not acceptable


- None

Risk Mitigation




- Updated List of retailers must be provided every quarter

DUPLICATE APPLICATIONS

In some cases, we might experience that the Merchant applies more than

once through different sources/different Partners (ISOs or/and PFs).

To eliminate the below risks we will not be accepting a Merchant more

than once:

a. Load Balancing

b. Legal

c. Relationship with Partners

d. Pricing and conditions management

The underwriter must carefully analyze whether the application has

already been ‘Accepted’ and if so the application should be declined –

reason being ‘Duplicate Application’

Exceptional cases must be analysed and approved by EXCO.

FILE SHARING SERVICES(CYBER LOCKING)Brief description of the industry

Merchants in this sector provide the ability for individuals to store and

access information online in a cloud rather than stored locally on a device.

Information can be ranging from photos, videos, documents or any other

data.


- MCC 4816

- Merchant Registration Progress (MRP) registration is required

– USD 500 or any equivalent

- ECOM Only

- AML Policy is mandatory

- Only personal Cloud Storage is acceptable


- None

Risk Mitigation




FURNITURE


Merchants classified under this category sell home furnishings and a wide

variety of finished furniture products and accessories for the home.


- MCC 5712

- Physical Presence is mandatory for made to measure furniture

- Evidence of the Physical presence must be provided – such as picture of

the Warehouse where the products are kept

- If the product/furniture is not being manufactured by the MOR the

following is mandatory:

▪ Reseller Agreement OR Drop Shipper Agreement

▪ Sample Invoices

▪ Letter from qualified solicitor in the Manufacturer’s country of domicile

is required.

- If the product is being manufactured by MOR and is a replica the

following is mandatory:

▪ Letter from qualified solicitor in the Merchant’s country of domicile is

required.

FURNITURE

Letter from qualified solicitor must state that the furniture being sold by

the Merchant is not protected by Copyright or, if so protected, the

Merchant holds a valid license from the Copyright holder to manufacture

and/sell the furniture.

- Online only (no physical presence) is acceptable for off the shelves items


- None

Risk Mitigation




GAMBLING AND CASINO


Merchants classified under this business vertical provide the user the

ability to play online and receive monetary prizes in exchange if the user

wins. This includes Online Casino, Bingo, Betting and Poker.


- MCC 7995

- It is mandatory that the Merchant of Record is Licensed

- ECOM Only

- Curacao license on case by case basis (not acceptable for AMPs)


Following countries blocked from being permitted to have payment

process from:

- United States

- Turkey

- Norway

- Israel

- Japan

- Russia

- Slovakia (if not licensed)

GAMBLING AND CASINO

- Poland (if not licensed)

- France (if not licensed)

- UK (if not licensed)

- Sweden (if not licensed)

- Switzerland (if not licensed)

- Germany (if not licensed)

- Any other jurisdictions in which internet gambling is not permitted by law

Risk Mitigation

- Mandatory 3D Secure on first deposit

- Upfront Fixed Collateral based on Estimate Volumes

- Additional Rolling Reserve on a case by case basis

- Letter of Credit and/or Bank Guarantee

INSOLVENCY PRACTITIONER


This business model entails merchants acting as Insolvency Practitioners

(IP) meaning being licensed and authorized to act in relation to an

insolvent individual, partnership or company.


- MCC 6012

- Verify that the merchant holds a valid license

- No Bailiffs services

- Debit Cards and prepaid Cards only


- None

Risk Mitigation

In such business models, merchants normally ask for Gross Settlement.

When this is the case, Fixed Collateral is mandatory and based on

estimated volume.

JEWELRY, PRECIOUS STONES AND METALSBrief description of the industry

Merchants categorized under this business model sell valued items (such

as diamonds) which are not classified as custom jewelry.


- MCC 5094

- Minimum 2 years in operations

- ECOM Only

- Actual Shop must be visible and present

- Certificate of Authenticity is required

- Invoices/Agreements with manufacturer


- None

Risk Mitigation


- Weekly Settlement Cycle and 7 days funding delay days

LOTTO SYNDICATES


Companies acting as Lotto Messenger/Syndicates allows the player to

participate in international lottery games online. Acting as a syndicate

Companies do not require a License as they are not organizing the lottery

themselves. Lotto Syndicates purchase tickets from specific lotteries and

distribute the winnings amongst the syndicate members.

If the company is organizing the Lottery itself and acting as a Lotto

Syndicate the Online Gaming Policy should be adhere.


- MCC 7995

- By default, OCTs will not be provided

- If OCT is requested ▪ Mandatory prefunded account based on the

Merchant’s estimate volume and OCT percentage

▪ Mandatory Fixed Collateral based on the Estimate Volume

▪ VISA BAI Code: OG

- Merchant Registration Progress (MRP) registration is required – USD 500

or any equivalent

- If non-EEA lotteries are advertised on the Merchant’s website further

restrictions may apply

LOTTO SYNDICATES


- US (MC) if no MRP done

Risk Mitigation

Minimum default Rolling Reserve of 5% for 180 days if recurring is

involved

MONEY REMITTANCE


This business model provides the ability for an individual to transfer

funds/money from one country to another through the merchant’s

platform/website.


- MCC 4829

- License is required

- AML Policies mandatory

- AML Risk Assessment mandatory

- By default, OCTs will not be provided

- If OCT is requested

• Mandatory prefunded account based on the Merchant’s estimate

volume and OCT percentage

• Mandatory Fixed Collateral based on the Estimate Volume

• VISA BAI Code: FD (Fund Disbursement)


- None

MONEY REMITTANCE

Risk Mitigation

- Financial Risk is bare minimum as the Service Delivery Days is

immediately after the transaction is performed.

- The Company also must be Licensed so from a Compliance perspective

this is also a risk mitigation.

- Rolling Reserve (if any) will be established by the Analyst when they

perform the Credit Risk Checks.

- Funding delay days and cycle are as per General Underwriting Policy.

NUTRACEUTICALS/DIETCONTROL SUBSTANCESBrief description of the industry

Any product made from natural ingredients is normally considered as

Nutraceutical/Nutra or a Supplement. There are 2 types of models being

for products only (not services):

- Model 1 – one off sale without trial period and recurring

- Model 2 – monthly sale with trial and recurring also called ‘Negative

Billing Option’

On the other hand, any product which is human-made, or imitations of

natural substances is considered as Pharmaceutical/Pharma. For any

Pharma products a prescription is required. List of Controlled

Substance/Pharma can be found in Appendix A.


- MCC 5499

- Ingredients must be clearly disclosed on the website in text format

(picture format not acceptable)

- ECOM only MOTO not acceptable

- No pharmaceutical substance is accepted according to the Controlled

Substance List

- Money back guarantee program not acceptable

- Business model offering trial and recurring (Model 2) to refer to

Recurring/Subscription Policy

NUTRACEUTICALS/DIETCONTROL SUBSTANCESGeographic Restrictions/BIN Blocks applicable

- None

Risk Mitigation

- Minimum default Rolling Reserve of 10% for 180 days

ORGANIZATIONS – CHARITABLE SOCIALSERVICE/RELIGIOUS/POLITICALBrief description of the industry

Charitable Social Service

Non-political fundraising organizations engaged in soliciting charitable

donations/contributions on behalf of organizations engaged in social

welfare services, or social service organizations engaged in social welfare

services.

Non-licensed/registered Organizations are prohibited.

Religious Organisations

Religious organisations that provide worship services, religious training or

study, or religious activity such as Chapels, Churches, Mosques,

Synagogues and temples

Political Organisations

Membership organisations that promote the interests of a national, state,

or local political party or candidate, including political groups organised

specifically to raise funds for a political party or individual candidate.


- Charitable Social Services MCC 8398

- Religious Organizations MCC 8661

- Political Organizations MCC 8651

ORGANIZATIONS – CHARITABLE SOCIALSERVICE/RELIGIOUS/POLITICAL- Must be a Registered Charity

http://apps.charitycommission.gov.uk/Showcharity/RegisterOfCharities/Ch

arityWithoutPartB.aspx?Registered

CharityNumber=1128439&SubsidiaryNumber=0

- Trust Deed Mandatory (if applicable)

- If there is no Trust involved the Analyst must identify and verify:

• Chairman

• Treasurer

- Audited Report mandatory (not start-ups)

- AML Policy mandatory

- ECOM Only


- Case by case

Risk Mitigation

- Capping including capping on transaction amount and multiple

donations from the same card will be imposed.

PAYDAY LOAN

Brief description of Industry

Payday Loans are also known as HCSTC (High-Cost Short-Term Credit

Lending). HCSTC loans are unsecured loans with an annual percentage

interest rate (APR) of 100% or more and where the credit is due to be

repaid, or substantially repaid, within 12 months.


- MCC 6012

- Verify that the merchant has a valid License.

- Website must clearly state the APR (Annual Percentage Rate) – the aim

being that people have a clear understanding of the actual rate that they

will be paying (factoring in charges and daily interest rates).

- Applicable to B2C model:

Must include a policy stating that they do not collect funds more that

twice in the repayment period from the same Card

- Applicable to B2B model:

Must provide lending criteria and the repayment plan information,

including percentage rate for the loan.

- Debit Cards only.

- To request 6 months Transaction History for Companies being 1 year or

above in operation.


- None

PAYDAY LOAN


- UBOs to be scanned and confirmed that historically they are not

involved with any Company having the same business model which went

bust. This is to lower the Reputational Risk.

PPI (PAYMENT PROTECTION INSURANCE)Brief description of the industry

Payment Protection Insurance Companies were designed to cover

repayments in certain circumstances were the borrower is unable to meet

the repayment criteria. Circumstances such unemployment such as

sickness, accident, disability or death.

PPI Companies can operate in 2 ways:

1. Upfront Fee – this model includes a one-off fee once the individual

registers for the service.

2. Backend Fee – this model includes registration with the PPI Company

and the fee is applicable when there is a claim.


- MCC 6300

- Companies must be licensed (example UK Companies licensed by FCA)

- Upfront Fee models are not acceptable and prohibited


- none

Risk Mitigation

In such business models, merchants normally ask for Gross Settlement.

When this is the case, Fixed Collateral is mandatory and based on

estimated volume.

REAL ESTATE BROKERS/ PROPERTY RENTALSBrief description of the industry

Companies under this business models can be classified under two

categories:

- Real Estate Brokers/Agents: these specialized individuals bring

together buyers and sellers of real estate/property where the brokers will

act on behalf of the seller.

- Property Rentals: companies providing this service provide a website

with all the available properties for rent.


-- MCC 6513

- AML Policy

- Recurring transactions acceptable

- 3 Samples of Agreement between Merchant of Record and Property

Owners required if the Merchant is providing rental service

- Agency Service Agreement required if there is an Agency involved

- Rental acceptable only for Long Let that is equal or greater than 3

months

- License might apply in certain cases to be escalated to Legal


- none

REAL ESTATE BROKERS/ PROPERTY RENTALSRisk Mitigation

- Risk is being mitigated by the Agreements being received

- For Credit Risk the Analyst will review the Value at Risk and decide on a

case by case basis for the required Rolling Reserve.

- Funding delay days and cycle are minimum as per General Underwriting

Policy

SKILL GAMES


Merchants classified under this MCC normally require a level of skill by the

participant, of which under normal circumstances, monetary or product

prizes may be offered to the winner after completing the game and no

monetary refunds are usually offered. Skill Game does not involve in

placement of bet or wager.


- MCC 7994

- Merchant Registration Progress (MRP) registration is only applicable if

Merchant will accept payments from US – USD 500 or any equivalent.

- License might apply in certain cases →to be escalated to Legal

- License might apply in certain jurisdiction, pls refer to Legal.

- When Merchant is offering a simple skill game to enter the website and

then there is a change of winning monetary value (combines game to

offer a raffle) a License must be provided and ‘Gambling and Casino’

Policy applies.

If the License is not available, the merchant will be declined.

- Age verification required – Participants 18+

- Subscription acceptable

- Prize/rewards may be in points or gifts. In case the Prize is Monetary this

cannot be greater than EUR 50 or equivalent in any other currency

SKILL GAMES


- If merchant will not accept payments from US – Block BIN for US

Risk Mitigation

If the merchant offers a subscription-based service, the below is

mandatory:

- 10% Rolling Reserve

- Weekly Settlement days


If the merchant does not offer a subscription-based service, the

offer provided to the merchant is negotiable.

SUBSCRIPTION / CONTINUITYMERCHANT / NEGATIVE BILLING OPTION (FREE TRIAL + RECURRING)Brief description

Merchants have the option to apply for ‘Recurring/Subscription/Continuity’

to be enabled on their Merchant Account/ID provided the business model

apply a charge to the cardholder in predetermined intervals for services or

goods of an ongoing nature.

The Payment will continue until the buyer either cancels the service or the

total amount is paid off.

The card schemes also allow Stored Credentials for Recurring transactions

(MITs – Merchant Initiated Transactions) in 2 particular cases:

1) Instalment Payment Transaction —Value “I” in POS Environment

Field 126.13: A transaction in a series of transactions that use a stored

credential and that represent a cardholder agreement for the merchant to

initiate one or more future transactions over a period for a single purchase

of goods or services.

2) Recurring Payment Transaction —Value “R” in POS Environment

Field 126.13: A transaction in a series of transactions that use a stored

credential and that are processed at fixed, regular intervals (not to exceed

one year between transactions), representing cardholder agreement for

the merchant to initiate future transactions for the purchase of goods or

services provided at regular intervals.

SUBSCRIPTION / CONTINUITYMERCHANT / NEGATIVE BILLING OPTION (FREE TRIAL + RECURRING)The underwriter must carefully analyze whether the business model is

relevant to the offering of Recurring, that there is clear indication, on the

customer journey, that the authorization is for a subscription and that the

cardholder receives a notification prior the next billing date.

Conditions

- 3 to 6 months chargeback history is mandatory for established

businesses

- Forecast is mandatory for startups

- Minimum default Rolling Reserve of 10% for 180 days

- Default 7 days funding delay

- Default weekly settlement cycle

The negative option billing business model

A new merchant category has been identified for merchants who offer a

trial and subscription service whereby cardholders automatically receive

goods or services on a recurring basis (such as weekly, monthly, semi-

annually, or annually), after an initial trial period in which cardholders can

evaluate the products/services and decide to purchase or return/cancel

the subscription.

SUBSCRIPTION / CONTINUITYMERCHANT / NEGATIVE BILLING OPTION (FREE TRIAL + RECURRING)The following conditions applies for Negative Billing Option for

Mastercard

- Assign merchants the card acceptor business code MCC 5968 (Direct

Marketing – continuity/subscription Merchants).

- Identify all third-party entities that provide services directly to the

merchant involving access to cardholder data (such as customer

relationship managers). These service providers must be disclosed, who

will in turn register them with MasterCard as Service providers.

- Verify that the trial period begins on the date that the product is received

by the cardholder;

- After the trial period of a product has ended, but before any additional

payments are made by the cardholder, the merchant must provide the

cardholder with the following information for which the cardholder’s

authorization will be requested, and the merchant must obtain the

cardholder’s explicit consent for the payment amount before initiating the

authorization request:

a) The payment transaction amount

b) The payment date (although the date is not permitted to change, the

merchant may provide a secondary billing date in case the cardholder’s

account has insufficient funds, but only if this date is disclosed prior to

obtaining consent)

c) The merchant name as it will appear on the cardholder’s statement

d) Instructions for cancelling the subscription at the cardholder’s discretion

SUBSCRIPTION / CONTINUITYMERCHANT / NEGATIVE BILLING OPTION (FREE TRIAL + RECURRING)- Each time that the merchant attempts an authorization transaction, the

merchant must send a receipt to the cardholder by email or other

electronic means (such as an e-mail or text message) that includes

instructions on how to cancel an unsuccessful authorization transaction

attempt, the receipt must indicate the reason for the decline response;

- An e-commerce high risk negative option billing merchant must provide a

direct link to an online cancellation procedure for recurring payment

transactions on the website where the cardholder made the initial

purchase. In addition, the merchant’s website must display a customer

service phone number on the website maintenance page for periods

during which the website is offline (such as for software updates,

scheduled maintenance, or technical issues;

- The merchant must end written confirmation to the cardholder when the

cardholder’s trial period and/or high-risk negative option billing plan has

been cancelled.

SUBSCRIPTION / CONTINUITYMERCHANT / NEGATIVE BILLING OPTION (FREE TRIAL + RECURRING)Transaction Processing requirements for Negative Billing Option

for Mastercard

- For first Presentment/1240 transactions acquired for a high-risk negative

option billing merchant, PDS 0170, subfield 1 (Customer Service Phone

number) must be present when DE 22 (Point of Service Data Code),

subfield 5 (Cardholder Present Data) is equal to 2 (cardholder not present,

mail transaction), 3 (cardholder not present, phone transaction), or

4(cardholder not present, standing (recurring) transaction). If a toll-free

customer service phone number is provided in PDS 0170, the most

appropriate location should be provided in the Card Acceptor City subfield

and should correspond to the other card acceptor location information

provided in the DE 43.

- For internet transactions acquired for a high-risk negative option billing

merchant, DE43, subfield 1 (Card Acceptor Name) must contain the name

of the web site on which the cardholder made the purchase and would

most likely recognize.

- For mail order or telephone order (MOTO) transactions, private date sub-

element (PDS) 0170 (Card Acceptor Inquiry Information), subfield 1

(Customer Service Phone Number) must contain the merchant’s contact

telephone number. The telephone number provided must be valid and

accessible by all customers worldwide;

SUBSCRIPTION / CONTINUITYMERCHANT / NEGATIVE BILLING OPTION (FREE TRIAL + RECURRING)- All subsequent recurring payment transactions must be processed under

the same merchant ID in DE 42 (Card Acceptor ID Code) and merchant

name in DE 43, subfield 1 (Card Acceptor Name) that was used for the

initial payment transaction.

The following conditions applies for Negative Billing Option for

Visa

A negative option Merchant must do all of the following:

- Before completing an agreement or Transaction, clearly disclose to the

Cardholder all of the information specified in Table: Required

Disclosure/Transaction Receipt/Notification Content and Format for

Negative Option Transactions.

- If the first Transaction is an Electronic Commerce Transaction, consent

must be obtained via a “click-to- accept” button on the checkout screen.

- At least 7 days before initiating a subsequent Transaction, merchants in

Europe must send an electronic reminder notification (i.e., email or SMS /

text, if agreed with the cardholder) and a link to online cancellation.

SUBSCRIPTION / CONTINUITYMERCHANT / NEGATIVE BILLING OPTION (FREE TRIAL + RECURRING)- Provide Link or other simple mechanism to enable the cardholder to

easily cancel any subsequent transactions online or via SMS/text message.

-Additionally, subscription merchants in Europe must send an electronic

copy (i.e., email or SMS / text, if agreed with the cardholder) of the terms

and conditions of the subscription service to the cardholder, even if no

amount was due at the time.

- In the Europe Region: The Merchant must provide the Cardholder with

confirmation of the establishment of the Recurring Transaction agreement

within 2 business days.

Also Statement Descriptor is a new policy in all regions, effective 18 April

2020. An additional descriptor indicating a trial period-related transaction

will be required in the Merchant Name field for the first financial

transaction at the end of the trial period. This descriptor (e.g., “trial,” “trial

period,” “free trial”) will then appear on cardholder statements, online

banking, mobile apps and SMS / text alerts.

TAXI CABS AND LIMOUSINES


Companies providing Taxi Service can be set up in two models:

Model 1: The Company is owned by the Drivers themselves.

Model 2: The Company provides a platform to connect the different

licensed drivers with the customer requesting the taxi service.


- MCC 4121

- License required for private hire or taxis

- Model 1: to request the individual’s Driving License

- Model 2: to request a statement from the Merchant of Record confirming

all the drivers are licensed and request 3 sample of the Driving License

- License might apply in certain cases to be escalated to Legal.


- None

Risk Mitigation

For startups a Rolling Reserve of 5% for 90 days is requested. In these

cases, the Rolling Reserve is negotiable.

TICKET AGENCIES/BROKERS


Merchants classified under this business model buy tickets from licensed

sellers/event organizers and resells these tickets on their platform/website.

Tickets offered are for different types of events ranging from Music

Concerts/Festivals to Conferences.


- MCC 7922

- Samples of Reseller/Authorization Agreement between the Merchant of

Record and the Company providing the Event.

- Price Comparison must be performed by the Underwriting

- Startups not acceptable

- Companies must be 18 months in operation

- 3 months transaction history is mandatory


- None

Risk Mitigation

- Rolling Reserve of 10% for 180 days is mandatory

- Weekly cycle is mandatory

- 7 days funding delay days is mandatory

TRAVEL AGENCY / TOUR OPERATOR


Travel Agencies and Tour Operator companies act as agents on behalf of

the actual service provider. The difference between these two types of

models is Tour Operators offers the full travel pack including flight,

accommodation and any excursions. In this case we would not be

onboarding the actual flight operator or cruise operator – these are on the

prohibited list.


- MCC 4722

- Must be a member of a Travel Association providing guarantee to

consumers For example, but not limited to, one of the following

associations: o IATA - https://www.iata.org/Pages/default.aspx

o ATOL - https://www.caa.co.uk/atol-protection/

o ABTA - https://www.abta.com/cop

- To request 3 to 6 months Transaction History for Companies being 1 year

or above in operation

- To request for a Business Plan including forecasts for startups

- To check Insurance/Bonding Authority or any similar scheme according to

Local Laws

TRAVEL AGENCY / TOUR OPERATOR


- None

Risk Mitigation

For this business model a Rolling Reserve always applies with a minimum

of 5% for 90 working days.

When the Merchant is secured with the Insurance/Bonding Authority or

any similar scheme according to Local Laws the risk will be mitigated and a

low rolling reserve of 5% for 90 days can be requested

TOBACCO SELLERS – CIGARS STORES AND STANDS

Brief description of Industry

Merchants classified under this category sell tobacco, cigarettes, electronic

cigarettes, cigars, pipes, and

smokers’ supplies.


- MCC 5993 including E-cigarettes and other related accessories

- Accessories, such as pipes that directly promotes for marijuana use – are

not acceptable

- Merchant must demonstrate comply with age verification requirements

- Merchant must demonstrate local taxes are paid

- Verify the business activity registered with the Company registrar such as

Business code related to Tobacco stores /wholesaler etc

- Merchant Registration Progress (MRP) registration is required – USD 500

or any equivalent

- E-Com Only, MOTO not allowed

- Chargeback ratio below 1%

- To request 3 to 6 months Transaction History for Companies being 1 year

or above in operation

TOBACCO SELLERS – CIGARS STORES AND STANDS


- Block NON-EEA BINs


- For Startup Company mandatory RR of 10% for 130 working days

- For Companies older than 1 year a mandatory RR of 5% for 130 working

days

IPAY TOTAL LTDhttps://[email protected]

+44 800 776 5988

60 Windsor AvenueLondon England SW19 2RR.

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