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Electric vehicle (EV) charging is still a relatively young market — but it’s one with huge growth potential. This potential has been recognised by Visa and Mastercard, with both now deciding that EV charging should have its own specific merchant category code (MCC).
This news is a major shot in the arm for the industry – as it proves EV charging is gaining traction, and that it has its own specialities and characteristics to warrant distinction from other related categories, such as petrol pumps and parking meters.
In this blog post, we explain what this change means for you and your customers.
What is a merchant category code?
In payment, every industry has its own merchant category code (MCC). An MCC is used to classify a business by the goods or services it provides. These four-digit codes are allocated either by merchant type (for example, there’s an MCC for hotels, one for bakeries, and another for shoe stores) or by merchant name (airlines typically get their own specific MCC; for example, KLM’s is 3010).
A merchant is assigned a MCC by an acquiring company when they start accepting credit cards as a form of payment.
What are MCCs used for?
These codes can be used to determine fees; to calculate cash-back or rewards points for spending in certain categories; for tax purposes; or to define the rules and restrictions surrounding card transactions. It’s this last use case that made the early days of EV charging payments so challenging.
A brief history of MCCs for EV charging
As an early adopter regarding payment solutions for the EV market, we’ve worked closely with both Visa and Mastercard since 2015. Back then, they allowed merchants to use the MCC for unattended petrol because it was similar to EV charging behaviour.
However, we later learned that this came with limitations regarding authorisation and spending limits. We managed to oversee a change in MCC from unattended petrol to parking, which provided the benefits of pre-authorisation for 24 hours and removed the limitations for contactless payment.
And now we’re delighted to see EV charging receive its own MCC — but with this change comes its own set of rules and restrictions.
Same code. Different rules.
Both Mastercard and Visa have agreed on the same MCC number (5552), but with a slightly different interpretation of the rules.
Mastercard
Effective from 17 July 2020, Mastercard will support MCC 5552 for transactions related to EV charging involving any type of electric vehicle.
In accordance with the Revised Payment Services Directive (PSD2) regulation, the operator must inform the EV driver upfront about the estimated amount that will be reserved on the cardholder’s account.
The cardholder must provide consent to this amount before continuing with the process and initiating pre-authorisation.
To comply with this, we recommend placing a message on the screen display or a sticker on the terminal making this clear to the customer.
Visa
Already applicable from 18 October 2019, Visa also supports MCC 5552 for transactions related to EV charging. And like Mastercard, Visa allows:
- Contactless-only solutions;
- Pre-authorisation;
- And incremental authorisation.
Visa does request operators to also offer a fall back solution for cardholders that don’t have contactless cards. This could be an app, website, QR code or a phone number where the customer still can perform a transaction.
Note: There is one exemption to the use of MCC 5552; when the merchant’s primary business is operating a garage or car park with additional EV services, the merchant can identify the EV charging transactions with MCC 7523 (automobile parking lots and garages).
Parking is an exemption in PSD2, meaning SCA limits do not apply and also a chip/magnet can still be used without SCA. This is in contrast to the new EV charging MCC 5552 which has no exemption in PSD2.
CCV’s recommendations: what should you do now?
With the arrival of the new MCC code, the rules for Strong Customer Authorisation (SCA) under PSD2 will come into force for EV charging.
This means that, while existing contactless-only solutions can still be deployed, there remains a possibility that a customer is asked to enter their PIN because they have either:
- Reached the cumulative amount of 150 euros in contactless spending; or
- They’ve carried out 5 contactless transactions in a row without entering their PIN.
In this scenario, the customer will either need to present a new card or use a mobile payment solution in order to meet the SCA requirement and complete their transaction.
Because it’s more efficient for EV charging terminals to leave out PIN pads, this could lead to transactions being declined when PIN entry is required.
To overcome this issue, we recommend the following:
- Get a brand new and game-changing CCV IM30 self-service payment terminal;
- Add a separate PIN pad to the existing terminal to facilitate PIN entry;
- Implement QR code payments;
- Or use on-screen messaging or supplementary advertising to encourage your customers to pay using mobile payment solutions such as Apple Pay or Google Pay. These payment solutions already incorporate strong authentication, so they’re not bound by the same limitations as contactless card payments.
Key takeaways
The introduction of a specific MCC marks an exciting moment in the growth of the EV charging industry. We’re now witnessing a young market move towards maturity and standardisation, which brings with it legitimacy and endorsement from two of the world’s major payment brands.
However, at the same time, it also highlights a need for EV charging operators to quickly adhere to new rules and regulations surrounding payment.
If you’d like to discuss how this new MCC impacts you, please contact us.