Charities and Mastercard Policy Changes

When Mastercard changed its policy requirements for subscription payments, that impacted charities. Charities were subject to additional administrative requirements even though recurring donations really weren’t part of the problem. The new requirements have since become only recommendations for charities, unless a charity is subject to a Mastercard compliance monitoring program for four months. Read on for all the details.

What’s this all about?

Effective September 22, 2022, Mastercard revised its policy requirements for all merchants using a subscription model. As described by US-based The Nonprofit Alliance, Mastercard’s intention was “to mitigate negative practices associated with the utilization of a subscription billing model and/or a negative billing option.” In other words, to protect consumers from being scammed through sketchy subscription or “opt-out” billing practices. These often arise after signing up for “free trials” for various goods and services.

The policy’s impact on charities

Mastercard was clear in a Q&A document that “If a customer is donating to a charity on a recurring basis” that “would be considered a subscription service.”

This policy was an issue for charities because (1) it would increase administrative burdens and (2) charities were not contributing to the problem Mastercard was trying to address.

Extended Effective Date

After discussing the issue with the charitable sector, the effective date for nonprofits was extended to March 21, 2023.

Entirely Revised Policy

Most recently, Mastercard has entirely revised its policy to make the requirements optional for charities, except in certain circumstances. Mastercard will focus its efforts on merchants who “fail to properly manage cardholder complaints and chargebacks related to a subscription/recurring payment plan.”

The requirements are now recommended best practices for charities with recurring Mastercard donations.

But the recommendations become requirements for charities that are “identified for at least four months” in the Acquirer Chargeback Monitoring Program (ACMP). What is ACMP? It’s basically a program used by Mastercard to identify merchants that have excessive chargebacks and to bring them into compliance with Mastercard standards.

The policy’s recommended best practices

What are the best practices (that could become requirements)?

At sign-up:

1. Disclose the basic terms of the donation at the time of donation sign-up. It should include:
   1. Amount of donation
   1. Frequency of donation
   1. Note: linking to a page with this info is not sufficient
2. Record the donor’s acceptance of the basic terms
3. Send a confirmation email or text to the donor at the time of enrolment. The confirmation should include:
   1. Terms of recurring donation
   1. Clear instructions on how to cancel

After sign-up:

1. Provide an online or electronic way to cancel
2. Provide an electronic receipt for each transaction. The receipt must:
   • Include or provide access to account management options
   • Include instructions for cancelling the subscription
3. If the donation is made less than every six months, send the donor a notification 7-30 days before the billing date with terms of recurring donation and how to cancel

Want to chat about it?

If you want to talk about how your charity might implement (or already has implemented!) some of these best practices, we’ve got a place in The Green for you!  You can also check out our November Bulletin, which links out to a helpful article on this topic from the US-based National Council of Nonprofits.