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Visa Authorization Adjustments: Enhanced Tip Functionality

Visa recently introduced authorization adjustment framework to help improve the payments experience for a limited set of merchant categories. Authorization adjustment, also known as auth adjustment, allows eligible merchants to adjust the authorized amount of a transaction immediately before settlement for Visa transactions. Common use cases for authorization adjustments are tipping and order add-ons.

This functionality will be released to Braintree Direct merchants located in the US and APAC regions in September 2018.

Eligible merchant categories

Visa’s auth adjustment framework opens up tip and order adjustments to a wider variety of merchant categories:

  • Lodging
  • Vehicle rentals
  • Cruise lines
  • Restaurants and bars
  • Food-delivery services
  • Amusement parks
  • Taxicabs and rideshares
  • General rental categories

If you have questions about your merchant category, please contact our Support team.

How the auth adjustment works

If the initial authorized amount is insufficient, an eligible merchant may submit for settlement for an amount higher than the original authorized amount. Braintree then adjusts the original authorized amount to equal the new, adjusted amount. If the cardholder’s issuing bank approves the adjustment, Braintree automatically settles the transaction for the new amount. If the cardholder’s bank declines the adjustment, Braintree returns a validation error, and the merchant may have the option to reattempt the adjustment. See the below sections for more info on these validations.

Example: Tip adjustment

  1. Tina orders $20 of food using Super Food Delivery’s application
  2. Super Food Delivery authorizes Tina’s card for $20
  3. Tina is pleased with the promptness of her delivery and tips $5 through the application
  4. Super Food Delivery submits the existing $20 authorization for settlement for $25 to incorporate the added tip
  5. Braintree then adjusts the authorized amount from $20 to $25 and, if successful, settles the transaction for $25
  6. Tina’s sees a single $25 charge on her bank statement

Example: Order adjustment

  1. Tina reserves a room at her favorite hotel for 4 nights
  2. The hotel authorizes her card for $400 when she checks in
  3. Tina decides to stay an additional night at a cost of $100
  4. When Tina checks out, the hotel submits the existing $400 authorization for settlement using the amount, $500
  5. Braintree adjusts the $400 authorization to $500 and, if successful, settles the transaction for $500
  6. Tina sees a single $500 charge on her bank statement

Merchant benefits

Auth adjustments return a decline response in real-time, so the merchant can immediately confirm the success of an adjustment before fulfilling a customer’s order.

Cardholder benefits

Customers benefit, too! Previously, order adjustments could take up multiple line items on customer bank statements, which caused confusion. Incrementally adjusted authorizations generally take up a single line on the customer’s bank statement, making for a clearer payment experience.

Additionally, customers can be made immediately aware when their tip or order adjustments are declined, so they can update their payment methods and complete their orders more quickly.

What do merchants need to do?

To accommodate this new framework, Braintree will update our order- and tip- adjustment processing. A majority of these updates will take place on the backend; however, eligible merchants should update their integrations to ensure they receive real- time decline responses and abide by Visa’s updated expiration time frames. See the below sections for details.

Merchant integration updates

In order to incrementally adjust a transaction, an eligible merchant would simply submit for settlement for a higher amount. Merchants utilizing auth adjustments must also listen for validation errors to determine if the adjustment was declined by the customer’s issuing bank. Auth adjustment attempts generate auth adjustment objects, which allow merchants to look up the details of an auth adjustment later.

Soft declines

Soft-declined adjustments return validation 95603, which indicates a temporary issue. If the initial adjustment attempt is soft-declined, the merchant may reattempt the submit for settlement request. For more info on processor responses, see our support docs.

Hard declines

Hard-declined adjustments return validation 95602. Merchants should not reattempt hard-declined adjustments, as they indicate an issue that cannot be resolved immediately.

If an adjustment is hard-declined or continues to soft-decline, the merchant should submit the original auth amount for settlement. The merchant should then charge the additional amount via a separate authorization.

Auth expiration changes

Visa previously allowed authorizations to remain in an “Authorized” status for up to 10 days before they expired. With auth adjustments, Visa announced new expiration time-frame changes for some merchant categories meaning extended time frames for lodging, vehicle rental, and cruise line merchants and reduced time frames for restaurants, bars, amusement parks, and taxicab merchants. Read more in our post on New Authorization Expiration Time Frames.

Questions?

If you have any questions about the implementation of Visa authorization adjustments, contact our Support team.

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Tim Whicker Tim is a Business Analyst under Braintree's Payment Operations team. In his free time, he's a tech, music, and design enthusiast. More posts by this author >>

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