In the cycle closing process, the minimum amount due (MAD) is the amount that the cardholder must pay by the statement due date to avoid overdue charges.

MAD calculation strategy

There are three strategies for calculating the MAD. All three strategies use a MAD percentage value, but this value is defined slightly differently, depending on the strategy.

• Strategies 0 and 1 use the minimum_value field, defined in the program transaction categories, for the MAD percentage.
• Strategy 2 uses the Percentage for calculating the minimum payment amount program parameter for the MAD percentage.

The strategies are defined as follows.

Use Pismo Control Center or the Update program(s) parameters endpoint, to set Minimum payment calculation method to 0, 1, or 2.

If you select Strategy 0 or 1, you must configure the MAD percentage for the program transaction categories of all your debit transaction types. For more information, refer to How to configure the MAD percentage for a program transactions category.

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If you don't configure the MAD percentage for a category, it defaults to 0.

If you select Strategy 2, use Pismo Control Center or the Update program(s) parameters endpoint to set the value of Percentage for calculating the minimum payment amount to the MAD percentage.

How to configure the MAD percentage for a program transaction category

Use either Create program transaction category or Update program transaction category to set the MAD percentage in the minimum_value field of the transaction category. One category can apply to any number of transaction types.

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For Strategy 2 in the previous section, if minimum_value is set to 1 (100%), this overrides the value in the Percentage for calculating the minimum payment amount program parameter. For more information, refer to Full-amount transactions.

Example program transaction categories

The following table demonstrates how MAD percentages could be assigned to program transaction categories.

Example transaction types

Your transaction types could be assigned to program transaction categories as follows. See How the program uses configurable entities for more information.

Setting the transactions in a category to full-amount

In some cases, you might not want the debit transactions in a program transaction category to be subject to refinancing. In such cases, the full amount of such a transaction must be included in the MAD, so these are called full-amount transactions. To make the transactions in a program transaction category full-amount, you set the minimum_value field of the category to 1.

For Strategies 0 and 1, having full-amount transactions in the cycle doesn’t change the calculation of the MAD, because the formula is applied to each transaction separately. Since the MAD percentage for a full-amount transaction is 100% (minimum_value = 1), applying the formula results in the entire amount of the transaction being included in the MAD.

For Strategy 2, however, if the current cycle includes full-amount transactions, the calculation is first done without including the full-value transactions. That is, the amounts of the full-amount transactions are subtracted from the current balance and the resulting adjusted balance is used in the formula. Next, the amounts of the full-amount transactions are added to the result returned by the formula to get the actual MAD. Second example in Strategy 2 examples shows how this works.

Bypassing the MAD calculation strategy

You can use the Create or update statement minimum amount due endpoint to bypass the MAD calculation strategy for the current cycle.

Examples

Strategy 0 example

This example applies when Minimum payment calculation method is set to 0.

Cycle 1 statement
(Assume MAD percentage = 5%.)

Previous balance: $0.00
Current balance (total amount due): $302.00
SUM(minimum per transaction): $15.10 Minimum amount due (MAD): $15.10

Cycle 2 statement
Assume MAD percentage is 5%.

Previous balance: $302.00
Current balance (total amount due): 302.00 + 304.00 = $606.00
SUM(minimum per transaction): $15.20
If no payments were made:
Minimum amount due (MAD): 302.00 + 15.20 = $317.20 (previous closing balance + MAD)

Strategy 1 example

This example applies when Minimum payment calculation method is set to 1.

Cycle 1 statement
(Assume MAD percentage = 5%.)

Previous balance: $0.00
Current balance (total amount due): $302.00
SUM(minimum per transaction): $15.10 Minimum amount due (MAD): $15.10

Cycle 2 statement
(Assume MAD percentage = 5%.)

Previous balance: $302.00
Current balance (total amount due): 302.00 + 304.00 = $606.00
SUM(minimum per transaction): $15.20
If no payments were made:
Minimum amount due (MAD): 15.10 + 15.20 = $30.30

Strategy 2 examples

These examples apply when Minimum payment calculation method is set to 2.

First example

In Strategy 2, the Pismo platform calculates the overdue amount using the following formula.
overdue amount = MAD from previous cycle - credits of type 7253 (Payment received) from current cycle

The over-limit amount is calculated at cycle closing as over-limit amount = current balance − max credit limit or 0 if current balance − max credit limit is negative. This amount is included in full (100%) in the MAD, independently of the over-limit fee. Separately, if the program parameter Overlimit fee amount is greater than zero, and the account exceeded its limit during the cycle, the platform posts a fee transaction (once per cycle) in the statement being closed.

The Pismo platform uses these results as follows to calculate the MAD.
MAD = (current balance - overdue amount - over-limit amount) × MAD percentage + overdue amount + over-limit amount

Cycle 1 statement
(Assume Percentage for calculating the minimum payment amount = 10%.)

Previous balance: $0.00
Current balance (total amount due): $602.00
Minimum amount due (MAD): 602.00 × Percentage for calculating the minimum payment amount = 602.00 × 0.1 = $60.20

Cycle 2 statement
(Assume Percentage for calculating the minimum payment amount = 10% and max credit limit = $1000.)

Previous balance: $602.00
Current balance (total amount due): 602.00 + 650.00 = $1252.00
Overdue amount: $0 (since the payment of $100 was greater than the MAD for the previous cycle)
Over-limit amount: 1252.00 - 1000.00 = $252.00
Calculate MAD:
(current balance - overdue amount - over-limit amount) × Percentage for calculating the minimum payment amount + overdue amount + over-limit amount = (1252.00 - 0 - 252.00) × 0.1 + 0 + 252.00 = 352.00
Minimum amount due (MAD): $352.00

Second example

The calculation is different if the account is overdue and there was an over-limit on the previous statement. In this case:
MAD = (current balance - overdue amount - current debits amount) × Percentage for calculating the minimum payment amount + overdue amount + current debits amount. Note: In the following example, this condition only occurs in cycle 3, so the above formula is only used in that cycle.

Cycle 1 statement
(Assume Percentage for calculating the minimum payment amount = 10% and account credit limit = $1000.)

Total credit: $0
Previous balance: $0
Current balance (total amount due): $705.00
Overdue amount: $0
Over-limit amount: $0
Calculate MAD:
(current balance - overdue amount - over-limit amount) × Percentage for calculating the minimum payment amount + overdue amount + over-limit amount = (705.00 - 0 - 0) × 0.1 + 0 + 0 = 70.50
Minimum amount due (MAD): $70.50

Cycle 2 statement
(Assume Percentage for calculating the minimum payment amount= 10% and account credit limit = $1000.)

Total credit: $70.50
MAD from previous statement: $70.50
Previous Balance: $705.00
Current balance (total amount due): 705.00 + 499.50 = $1204.50
Overdue amount: $0
Over-limit amount: $204.50 (current balance - overdue amount - over-limit amount) × Percentage for calculating the minimum payment amount + overdue amount + over-limit amount = (1204.50 - 0 - 204.50) ×0.1 + 0 + 204.50 = 304.50
Calculate MAD:
Since one transaction (for $20) is configured to use 100%, this value must be removed from the current balance when performing the calculation. The formula is applied to this adjusted balance, and $20 is added to the result to get the actual MAD:
Step 1: Adjusted balance = 1204.50 - 20.00 = 1184.50
Step 2: Apply the formula. (adjusted balance - overdue amount - over-limit amount) × Percentage for calculating the minimum payment amount + overdue amount + over-limit amount = (1184.50 - 0 - 204.50) × 0.1 + 0 + 204.50 = 302.50
Step 3: Add the full-amount transactions to the result. 302.50 + 20.00 = 322.50
Minimum amount due (MAD): $322.50

Cycle 3 statement
(Assume Percentage for calculating the minimum payment amount = 10% and account credit limit = $1000.)

Total credits: $0
Minimum previous statement: $322.50
Previous balance: $1204.50
Current balance (total amount due): 705 + 499.50 + 100 = $1304.50
Overdue amount: $322.50
Over-limit amount: $304.50
Calculate MAD:
(current balance - overdue amount - current debits amount) × Percentage for calculating the minimum payment amount + overdue amount + current debits amount = (1304.50 - 322.50 - 100) × 0.1 + 322.50 + 100 = 510.70
Minimum amount due (MAD): $510.70