Fee MasterCard charges to discourage merchants from authorizing a cardholder’s MasterCard but never charging the customer and closing (settling) the batch. Authorizations, even if not ever completed or settled, affect the customer’s “open to buy” available credit. Similar to Visa’s Misuse of Authorization Fee. While both Visa and MasterCard assess fees when authorized (approved) transactions cannot be matched to a clearing settlement record or an authorization reversal, Visa allows 10 days (20 days for T & E merchants) while MasterCard provides a 120 day window (with T &E merchant segments initially exempt).
Both Visa and MasterCard now penalize the occurrence of “ghost authorizations” (authorizations that are approved but never cleared), as these can adversely impact a cardholder’s open-to-buy, leading to increased declines and confusion at the point of sale. However, within Visa’s program the authorization amount and settled amount do not have to match whereas MasterCard will apply its Processing Integrity Fee if the final transaction amount was less than the authorized amount or the authorized amount varies from the subsequent clearing message amount.
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