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 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.

In Pismo Control Center, 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 transaction categories of all your debit transaction types. See How to configure the MAD percentage for a 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 Control Center to set the value of Percentage for calculating the minimum payment amount to the MAD percentage.

How to configure the MAD percentage for a transaction category

Use either Create transaction category or Update 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. See Full-amount transactions for more information.

Example transaction categories

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

Example transaction types

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

Full-amount transactions

In some cases, you might not want a debit transaction to be subject to refinancing. In such cases, the full amount of the transaction must be included in the MAD, so this kind of transaction is called a full-amount transaction. To make a transaction full-amount, you set the minimum_value field of its transaction category to 1. (Note that this makes all transactions in that category full-amount.)

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.

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 outstanding 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 (Outstanding balance of the previous and the current cycle x MINIMUM PERCENTAGE for each transaction category)

Strategy 2 examples

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

First example

In Strategy 2, the Pismo platform first calculates the overdue amount by following these steps.

1. The platform calculates an intermediate result:
   temp = MAD from previous cycle - credits of type 7253 (Payment received) from current cycle.
2. If temp is less than or equal to 0, it sets overdue amount to 0.
3. If temp is greater than 0, the platform checks the values of the program parameters Overdue tolerance percentage and Overdue tolerance amount. If neither of these parameters is set, then temp is the overdue amount. If one or the other of these parameters is set, the platform uses it to determine whether or not the account should be treated as overdue, as described in the Overdue tolerance guide. If the answer is 'yes', then temp is the overdue amount. If the answer is 'no', it sets the overdue amount to 0.

If the outstanding balance is greater than the available limit, the platform checks to see if the program parameter Overlimit fee amount is set to true. If so, then the over-limit amount must also be calculated:
over-limit amount = outstanding balance - available limit
Otherwise, the over-limit amount is 0.

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For this example, assume that Overdue tolerance percentage and Overdue tolerance amount are both null, and Overlimit fee amount is true

Now, the formula is used 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 x Percentage for calculating the minimum payment amount = 602.00 x 0.1 = $60.20

Cycle 2 statement
(Assume Percentage for calculating the minimum payment amount = 10% and available 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) x 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) x 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) x 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) x 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 outstanding 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) x 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) x Percentage for calculating the minimum payment amount + overdue amount + current debits amount = (1304.50 - 322.50 - 100) x 0.1 + 322.50 + 100 = 510.70
Minimum amount due (MAD): $510.70