Note: The below applies to Card-Not-Present transactions only.
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In 2017, MasterCard reinstated the use of the 20% tip tolerance to card-not-present (CNP) transactions conducted by U.S. restaurant merchants that have the following Merchant Category Codes (MCCs):
MCC 5812 (Eating Places, Restaurants)
MCC 5814 (Fast Food Restaurants)
The use of the 20% tip tolerance enables a restaurant merchant to add a tip amount after the authorization was approved. The tip amount must be within 20% of the authorization amount. The portion of the tip amount that exceeds the 20% tolerance may be charged back by the issuer for no authorization.
See the following restaurant CNP use cases:
A guest ordered sushi over the phone and picked up the order from the restaurant. the guest wants to leave a tip - the receipt prints with a tip line, and the guest adds a tip and signs the receipt.
A guest ordered pizza from the merchant's website or via an app on a mobile device. After the pizza is delivered, the driver produces a receipt for the guest, who adds a tip and signs the receipt.