On September 22, 2022, Mastercard put into effect a new set of requirements for receipts on recurring transactions. The intention was sound as Mastercard wanted to create a more positive cardholder experience and reduce negative transactions, such as chargebacks. However, there was significant pushback.
The new requirements sparked an important conversation between the nonprofit community and Mastercard, resulting in revisions to the receipt on recurring transactions requirement, effective October 11, 2022.
We appreciate the dialogue that we have had with members of the non-profit community over the past several weeks. It is based on these conversations that we have decided to make the requirements for confirming and offering the ability to cancel a recurring or subscription payment optional for non-profits.
This change is effective immediately and will only become a requirement for those non-profits that have excessive consumer complaints or chargebacks for four consecutive months. We believe this approach reflects the concerns for both operational efficiencies and a better donor experience. We’ll continue our conversations and consultation with the community around these standards to ensure continued support of best practices. – Seth Eisen, Senior Vice President for Communications at Mastercard
The revised recommendations indicate that nonprofits that maintain a low chargeback rate are not required to adhere to the receipts on recurring transaction recommendations. Still, they are important to understand and to implement to protect your nonprofit.
Here’s our best understanding of the recommendations presented by Mastercard:
- Electronic transaction receipt: Should include the terms of the subscription as well as instructions and access to a subscription management tool to adjust or cancel their subscription.
- Disclosure of subscription terms at the time of payment: When a donor completes a donation, they should see the subscription terms stated clearly, such as “You’re about to donate $100 USD monthly until canceled.”
- Renewal Receipt Emails: Nonprofits must send a receipt by email message or by other electronic method after every billing that includes clear instructions for how to cancel the subscription.
- For any subscription/recurring payment plan that bills a cardholder less frequently than every six months (e.g., cardholder is billed every six months every year, every two years, etc.), the merchant must send a notification at least seven days, but no more than 30 days, before the billing date that includes the terms of the subscription and instructions about how a cardholder may cancel the subscription.
- Provide clear instructions for canceling a subscription: This must be included in the subscription receipts as well communicated on the merchant’s website.
- A system for managing and canceling a subscription online: Nonprofits must provide an online or electronic cancellation method (similar to unsubscribing from email messages or any other electronic method) or clear instructions on how to cancel that are easily accessible online (such as a “Manage Subscription” or “Cancel Subscription” link on the merchant’s home page).
Mastercard advises that these policies are now seen as best practices for most nonprofits. However, these recommendations become requirements if a nonprofit is “identified for at least four months or more in the Acquirer Chargeback Monitoring Program (ACMP) as an Excessive Chargeback Merchant (ECM), High Excessive Chargeback Merchant (HECM), or Excessive Fraud Merchant (EFM) within the same audit period, as defined under the program.”
This essentially means that if a nonprofit experiences high chargeback rates for four months or more these recommendations, like receipts on recurring transactions, become required to comply with.
Using GiveWP Means You Have Everything You Need
You’ll notice that these Mastercard recommended practices are aligned well with what GiveWP already offers for the best donor experience:
- Donation Receipt Email is a default feature where donors receive a confirmation email after donating. This email can also be customized on a per form basis, for example, for a membership form that requires a recurring donation.
- The Donation Summary section on the Multi-Step and Classic Templates provide your donors with a clear statement of what they’re donating including the recurring amount and frequency).
- There are Renewal Reminder emails available to enable within the GiveWP dashboard, reminding your donors about their upcoming subscription.
- Every Donation Receipt email has a link to the donor’s Donor Dashboard, which is a page that lives on your website once you install GiveWP. We recommend highlighting this further in your emails, ensuring your donors know this is where they can manage their donation history, receipts, and recurring payments.
We recommend making the Donor Dashboard accessible to your donors by adding it to your main navigation or footer menu. This allows donors to log in easily and see their unique giving history and manage their subscriptions (by adjusting their donation amount or canceling their subscription).
Learn more about Mastercard’s statement on the revised requirements for receipts on recurring transactions here.
Disclaimer: This article is provided for informational purposes only and is neither intended to be nor should be construed as legal, accounting, tax, investment, or financial advice. Please consult a professional (attorney, accountant, tax advisor) for the latest and most accurate information.
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