How Is SCA Affecting Key Entry Payments? What Is a MOTO

SCA Factsheet Manual Key Entry For hotels, car rental and ferry companies

The EU Payment Services Directive 2 (PSD2) brings in new laws to improve consumer rights and reduce payment fraud. A key element of PSD2 is the introduction of additional security authentication for all online transactions initiated by consumers, known as Strong Customer Authentication (SCA). To ensure compliance with SCA, changes are also being made to some existing payment processes. One of the payment use cases impacted is “Key Entry”.

What is a Key Entry payment? Key Entry is used when a merchant has an agreement with a Cardholder to charge their Card if certain conditions are triggered. For example, where a Cardholder is a no-show for a Hotel Booking made via an Online Travel Agent (OTA). In these situations, where the Cardholder is not present, the Merchant can manually Key Enter details into a Terminal to submit a transaction. Please note that any handling of sensitive Cardholder information, is subject to PCI DSS requirements.

How is SCA affecting Key Entry payments? Under SCA rules some Key Entry transactions may be declined by Card Issuers. It is not Acquirers or PSPs that decline Card transactions. There are two key reasons why an Issuer would decline a Key Entry transaction:  If it is a Dankort Scheme transaction, as Key Entry is not allowed on Dankort Cards for no- show or delayed charges. This is mostly an issue in Denmark. Therefore, only international cards can be used for Key Entry.  If you are using a Payment Terminal which does not mark Key Entry transactions correctly for SCA. To be compliant, Card Schemes require these transactions to be flagged as “MOTO”.

What is a MOTO payment? And why is it relevant for Key Entry? MOTO is the short form of the payment term, Mail Order – Telephone Order. Typically, these are payments that are processed where the Cardholder is not present, for example, when they are making a booking over the phone with a Third Party. MOTO transactions are out of scope of the SCA regulation. In the case of Key Entry, it has been exceptionally allowed for an interim period, by Card Schemes that these types of payments can be processed as MOTO. This is because across Europe, there is a complex value chain involved when Travel and Hospitality bookings are made with Third Parties, until such time as there exists and industry-wide solution to this, MOTO payments are allowed to be used for no-shows and delayed charges.

Payments for bookings made with Third Parties: Organizations using Key Entry today will need to make some changes to be ready for SCA and avoid the risk of these payments being declined by Issuers. Please refer to Nets Terms & Conditions to understand the full rules of Key Entry. Key Entry is only allowed for certain types of transactions (e.g. no-shows, delayed charges) and only for certain merchant types (e.g. Hotels, Car Rental). In these cases, a business may use Key Entry. 1. Merchants must assess if their Terminal is able to correctly mark transactions as MOTO, with their Terminal provider. If Key Entry transactions are currently declined, it is likely that a Virtual Terminal will be required, which is by default a MOTO solution. 2. If a Virtual Terminal is required, a Merchant can contact their existing payments provider or reach out to Nets to get set-up. Merchants will need some instructions and onboarding before they will be ready to use a Virtual Terminal, but this is not a long process. Merchants should talk to their Booking Partners (e.g. Online Travel Agents - OTAs) about the SCA verification required when a cardholder makes a booking online.

Payments for bookings made directly with a Merchant: If you receive a booking directly on your website, then you must verify the payment under SCA rules whilst the Cardholder is in-session and collect a token from your iPSP to process later transactions. This will require you to have 3D Secure activated. If the cardholder books by phone, then the usual Virtual Terminal can be used to process payments. When the Cardholder checks-in, you also need to carry out a Pre-Authorisation on the Card, so that you can charge the card later. If the Cardholder is Present, Key Entry should not be used. Merchants must pay attention to PCI DSS requirements when handling Card details.

Differences between Card Schemes It is never allowed for Dankort Cards to be processed with Key Entry or Virtual MOTO for no-show transactions or Delayed Charges. These transactions can be performed with MasterCard or Visa Cards, and with co-badged Visa- Dankort Cards in Denmark.

Costs associated with Virtual Terminals / MOTO Please speak to your Account Manager or Nets Customer Care about the costs associated with MOTO payments. MOTO costs are different to payments processed in other channels, such as in- person or regular eCommerce.

Find out more about SCA More information on SCA can be found on the Nets website at https://www.nets.eu/en/payments/sca/. This is also where you will find the most current information on Key Entry.