Brand Reciprocity Revoked by Visa and MasterCard: What It Means for Merchants

Brand reciprocity refers to how the card brands acknowledge the different merchant levels of the other card brands. For example, if an organization is a Level 2 Visa merchant but a Level 4 MasterCard merchant (both designations based upon transaction volume), brand reciprocity means that the merchant would be classified as a Level 2 merchant.

The classification level determines the type of validation required (SAQ or ROC). Of the other participating card brands, only Discover acknowledges brand reciprocity; AMEX and JCB do not. However, Visa Canada still recognizes brand reciprocity within merchant levels. Brand reciprocity gained increased importance this past summer, when MasterCard announced that Level 2 merchants would have to validate compliance through an onsite audit and a ROC done by a QSA. The announcement specified that Level 2 MasterCard merchants would have to validate compliance through this more rigorous process by the end of 2010. Under brand reciprocity, this requirement meant that if a merchant was, say, a Level 2 Visa merchant (previously validating compliance through a SAQ) and a Level 3 MasterCard merchant by volume of transactions, the merchant would be considered a Level 2 MasterCard merchant and would thus be required to validate compliance through a ROC by an outside QSA firm. With brand reciprocity revoked, we need to take a look at a merchant’s transactions by card brand. By looking at these individual card brand transaction volumes, we can assist the merchant in making a determination of its merchant level status and the corresponding type of validation required. Also, remember that brand reciprocity is still in effect for Visa Canada.