Both of the international card schemes include in their impressive array of member fee tariffs an assessment fee for Issuers that breach a percentage threshold of authorisation referral responses to authorisation requests received.  The percentage is 0.5% but that is incidental.

Both card schemes are, of course, fiercely protective of their brand and their logic in establishing this programme, I guess, is that they do not want Visa and MasterCard cardholders being held up at POS and thinking less of the card scheme. 

Ok, seems reasonable ............ but let’s go a little deeper.  The reality is, card issuers want their cardholders POS experience to be quick, convenient, hassle free and they do everything they can to ensure that.  So, arguably, they have an even bigger incentive than the card schemes to limit referrals to an absolute minimum (both the good customer experience aspect but also to avoid cardholder complaints).

So card issuers would prefer not to have to generate any referral responses to authorisation requests.  One of the key reasons that they issue referral responses is that the transaction is taking place in an environment and/or a territory where a high risk of fraud is proven.

This aspect seems to be overlooked by the schemes.  Instead of simply pushing extra cost on to issuers they should be addressing/penalising high fraud risk MCCs, environments and territorial locations through acquirers and merchants.  If they do that successfully the issue of excessive referrals disappears.

After all, Card Issuers don’t refer for the fun of it.