Maestro

An interesting feature of bunq is that they offer an extra card, which can be Maestro, alongside your Debit Mastercard. I believe they do this because they are a Dutch bank and in the Netherlands (among some other places in Europe), Maestro has better acceptance than Mastercard.

I doubt Monzo would offer such a feature, but it makes me curious if anyone would have interest in it. I gather that beyond its better acceptance in certain places in Europe, Maestro has no real advantages over Debit Mastercard, yet has certain disadvantages (no Internet payments, no offline payments). I guess that’s why Monzo chose Mastercard.

Rather than a bank like Monzo, I think this is the sort of thing that a company like Curve could offer. Being able to get a Maestro card that lets you use your MasterCard/Visa cards in somewhere like the Netherlands would be really useful. Similarly in Germany, or any other country where MasterCard and Visa aren’t necessarily king.

Ooh, reminds me of https://en.wikipedia.org/wiki/Decoupled_debit_card

That sounds a fair bit like Curve - imaginecurve.com

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yes, would love to be able to get a Maestro card.
I do a lot of business travel to Holland and it’s extremely tedious not being able to pay for things on any of my cards.

This is an interesting one.

Lemme start by throwing out some background to this problem:

There are two paradigms of running a payments network: most payment cards these days (Mastercard, Visa, American Express, …) use what’s called a “dual-message” system, while Maestro is the most prominent “single-message” card these days.

Single-message is really simple: when you walk into a store with a Bunq card (Maestro, single-message), you swipe your card, and the money moves from your account to the merchant’s.

When you walk into a store and buy something with your Monzo card (Mastercard, dual-message), on the other hand, the merchant doesn’t actually take the money out of your account straight away - they make an “authorisation”, which is basically calling dibs on it; it’s deducted from your balance, but if you tap on the transaction, it shows as “pending”*. A week or so later, they come back and “present” those transactions, at which point the money actually leaves your account.

The reason this more complicated model exists is that there are some neat things you can do with it, like…

  • Updating the authorisation as you spend; pay-at-pump gas stations do this.
  • You can make purchases (“offline authorisation”) when you don’t have internet access, such as when you buy snacks on a plane; the airline can remember what you bought and charge you once you land, when they can get proper internet access again.
  • You can be TfL, authorise for a minimum fare, tally how much you ride for in a day and then claim it all the following morning. (If you ride the tube with a single-message card, you actually instead get charged the fare cap upfront and then they refund you what you didn’t ride for.)

An interesting thing to note is that while these are separate networks, you can actually run single-message transactions over the dual-message network and vice versa; in the case of Mastercard and Maestro, if a single-message merchant sends a single-message message to a dual-message Mastercard (try saying that ten times fast), Mastercard will translate that into an authorisation immediately followed by a presentment to simulate the single-message behaviour (I’m not super familiar with how this works in reverse). So in theory, your dual-message Mastercard should be usable with either kind of merchant.

Now, a card can have multiple “applications” on it, advertising different capabilities that the card has. For example, it’s not unusual for UK debit cards to be able to act both as a Mastercard/Visa card, and a “LINK” card, for use with certain old ATMs.

And herein lies the catch: while your Mastercard card can be used with either kind of message a lot of merchants in places like the Netherlands :netherlands: and Belgium :belgium: have terminals that look at your card and go “what the heck is this Mastercard nonsense, that’s not Maestro, I can’t talk to that”… even though it technically could, if it tried, and indeed we’ve never seen any issues as long as terminals know to do that.

This is a tricky problem to solve. If we wanted to issue Maestro cards, we could definitely do that, but we’d have to spend a lot of time implementing the single-message system properly (instead of relying on the automatic translation), and unfortunately there are only so many hours in a day :see_no_evil:. I’ve theorised that it’d be possible to make a “hybrid” card which presents as both, but actually producing such a card turns out to be technically tricky. Ultimately, the problem will likely fade over time as merchants upgrade their terminals to ones which correctly detect Mastercard as a thing they can talk to, but it’ll be a good while before that happens everywhere. :disappointed:

* Some banks make a distinction here between “balance” and “available balance”, the latter being the one with authorisations deducted. I never really understood why they make this distinction.

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Really interesting, thanks for taking time to explain!

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Thanks for the explanation, this is super informative! Now I’m curious about a few things:

  • Is “capture” a synonym for “present”? I’ve seen that term in payment-processor API docs and it sounds like the same thing.
  • Are US debit cards usually single-message? In practice they seem to act in much the way you’re describing, with systems not being able to authorize a larger amount and then capture a smaller one (e.g. US hotels usually charging a large refundable security deposit up-front on debit cards, whereas they authorize for it but then capture less on credit).
  • Any guesses as to why US fuel pumps make you specify if a transaction will be credit or debit? We used to see this a lot at other merchants too (particularly grocery stores), but it seems to be less common now. Apparently it’s also possible to make a “credit” transaction on a debit card (and maybe vice versa? idk) and I’m not sure what the distinction is.
  • I’m guessing the “balance” vs “available balance” distinction is so people don’t freak out when their balance drops in cases like that hotel case, where they authorize for a maximum charge and then capture a smaller amount later.
  • Also, I’m not sure if this is common in the UK, but in the US we very frequently have restaurants initially authorize for the nominal price of a meal, then when you return the merchant copy of the receipt, they capture for that + your specified tip. That’s not a question but this thread feels like a general resource on two-message card facts at this point.

I can understand some terminals not “understanding” Maestro, but wouldn’t it sometimes be a conscious choice? Do Mastercard charge different fees for Mastercard versus Maestro to the acquirer? (I know VISA do for their various card types.)

Yep! There’s a bunch of different terminology that means roughly the same thing, “settle” and “clear” are two other ones.

From my understanding, yep. Which is why foreign debit card acceptance is so weird in the US; lots of places aren’t aware that my European “Mastercard Debit” works very differently from what they’re used to seeing those words on.

My guess (I don’t drive) is that this is weird terminology for picking between the single- and dual message behaviour (partial authorisation vs upfront charge + refund). Don’t take my word for it though :see_no_evil:

Yep! That’s a USism that isn’t used much here; we typically do chip-and-pin- or contactles transactions, and some merchants’ terminals will ask you if you want to add a gratuity before it charges you.

Fun fact: Restaurants in the US are allowed to present for a certain amount above the authorised amount, so they authorise for however much your food cost, then just claim it + tips without actually bothering to authorise the tips first.

In some cases! The fees (“interchange”) vary by region (you can view all of them here). It’s worth noting that within the EU, the fees are all the same (because the EU said so) and the Maestro and Mastercard fees are the same. That’s not necessarily true in other places though.

Some quick samples:

:netherlands: mastercard.co.uk/content/dam/mccom/en-gb/interchange/documents/Netherlands.pdf
:us: mastercard.us/content/dam/mccom/en-us/documents/merchant-interchange-rates.pdf

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I seem to recall something about Debit vs Credit in the US actually meaning which network it’s processed by, but that may be entirely wrong.

Edit: Yep, “Credit” means it gets processed by VISA/Mastercard (and the store pays higher fees), “Debit” means some other network clears it: https://www.wisebread.com/debit-or-credit-which-one-should-you-choose-at-the-checkout

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heh, it’s usually branded the other way around here, as “Debit Mastercard”. So EU Mastercard Debit behaves more or less like a credit card, for payment-processing purposes?

Oh, can most merchants not? Would one normally send a new authorization and then capture for the new amount, then?

It is Debit Mastercard, but VISA Debit…

Ah, yes, here too - I keep getting them confused because it’s “Debit Mastercard”, but “Mastercard Credit” and “VISA Debit” :woman_facepalming:

Yeah, that’s another way to put it - though this is only true in the US; these things get really muddy internationally, because no two countries use cards the same way!

  • :us: The US uses single-message for debit cards, dual-message for credit cards.
  • :uk: The UK uses dual-message for both credit and debit cards; single-message has been practically dead for a very long time.
  • :sweden: Sweden uses dual-message for both (and barely anybody uses credit cards)… except children’s cards, which are single-message Maestro/Visa Electron and can’t be used online.
  • :netherlands: The Netherlands mainly uses Maestro cards (single-message debit), and has a system called “iDeal” which allow them to be used online with domestic/participating merchants. Most banks also issue dual-message debit- and credit cards, because Maestro can’t be used reliably abroad, or with many foreign online merchants.
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Wait, so is Visa Electron single-message then? I thought it was just Visa Debit (which is dual-message at least in the UK and ~sverige~) without the embossing and with offline transactions forbidden.

This is interesting!

To elaborate on this a little bit: US cards are unique in that they are legally obligated to connect to at least two different networks; in many cases, this will be a credit card network (such as Mastercard or Visa), and a debit (or “ATM”) network, such as STAR and NYCE mentioned in the article, but it’s also technically possible to make a hybrid VISA/Mastercard and sticking both logos on the card.

This ensures that if one network goes down, you’re not stranded, and tries to ensure that you can use your card in as many places as possible.

Remember, a single card can in theory be a patchwork of every single payment network in existence, but in practice most cards implement only the bare minimum number (two in the US, one in most other places).

VISA Electron is single-message, it’s VISA’s equivalent to a Maestro card. They’re given to children in SE because a single-message model makes it possible to prevent a card from being overdrawn; with a dual-message card, there’s a number of cases where a merchant can charge you for more than they authorised for, and you can’t say no - riding the tube in London being the classic one, where it charges you for a day’s worth of travel the following morning.

Yep! Normally, you have to present for exactly the amount you authorised for.

Every merchant has a “Merchant Category Code” or “MCC”, and the scheme gives certain MCCs permission to break this rule in certain circumstances. Restaurants in the US, for instance, can present up to a certain amount more than they authorised to account for tips, while airlines can make presentments without any authorisation at all for in-flight purchases.

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This is all so fascinating, thank you for continuing to indulge my curiousity :smiley:

Would you happen to know what V PAY is like? It’s a debit card product for the European market, which makes me wonder if it works more like Maestro and Electron than Visa Debit does.

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Oh, regarding the airlines thing, I always assumed that for those kinds of offline transactions they could just like… store on the card itself that money was reserved. Is that not how it works? :stuck_out_tongue:

V-Pay is basically just VISA Electron under the hood, so single-message there too.

Not quite, because there’s no easy way to get them off it! And storing the card is no good either if you can avoid it, because that’d mean the airline would end up with a big pile of card details that anybody could steal and just, pretend like you made a purchase, and then you’d have to get into a nasty dispute over whether you did or not and now everybody’s day is ruined :confused_dog:

What they do instead is called an “offline authorisation”.

Now, cards are less like USB drives (which you put things on and then read back out), and more like a tiny computer running tiny programs that you can feed some data into one end of and get some other data out the other end. And by “like”, I actually mean that’s precisely what they are.

This is important because among other things, your card contains an encryption key.

When you put your card into the terminal aboard a flight (or a train), your card can give the airline a timestamped, signed authorisation blob that proves that yes, you did make this purchase, there just wasn’t any internet access at the time, and the airline will send your bank that blob as proof that you did. This is really hard to forge, and normally requires you to enter your PIN, so it’s a lot more secure than just storing your card details.

Of course, the card doesn’t actually know how much money is on it, or if it’s been stolen and frozen since last time. So to prevent someone from running off with your card and abusing this, most cards will only allow a small number (often 5) payments in a row before it refuses to sign anything else until you successfully make an online payment. It will also often have a cap of how much money it’s willing to risk on offline authorisations.

Oh, if you’re running a store and somebody accidentally digs up an internet cable down the road, you don’t have to wait for OpenReach to turn up and fix it; you can temporarily switch to doing offline authorisations that you can submit once it’s fixed again. (There’s a bunch of caveats to this, though.)

Fun fact: This doesn’t actually work with single-message cards; those only work with online transactions, because they don’t have standalone authorisations and presentments.

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Oh, it turns out there’s a mode of VISA Debit where it requires online authorisations for everything, used as a sort of alternative to VISA Electron. But in such cases it’s not quite as safe as VISA Electron’s single-message system, as they could always like, actually take out more than was authorised later, right?