It’s been a marketer’s debate on monthly giving: do you send supporters a tax receipt each month to remind them of their gift, or just a single rolled-up tax receipt at the end of the year? Are those extra touchpoints harmful or helpful? Mastercard has published some new regulations on recurring transactions that make the case for a monthly reminder.
October 14, 2022 Update:
Great news for nonprofits! Mastercard has updated eligibility requirements for their new rules that require notifications be sent to consumers for recurring payments.
"The new requirements are recommended but not required for nonprofits. This decision was based in part on nonprofits’ very low chargeback and dispute rates,” explained The Nonprofit Alliance CEO Shannon McCracken. “On a case-by-case basis, a nonprofit organization that consistently has higher chargeback rates (over a threshold that Mastercard defines as “excessive”) will be required to adhere to the requirements and in those instances penalties for non-compliance will apply, as they would for other commercial merchants covered under the subscription requirements.”
September 2, 2022 Update:
Mastercard has alerted TNPA that they have extended the compliance date for nonprofits to March 21, 2023. In addition, Mastercard has also clarified that nonprofits are ONLY required to provide monthly notifications (receipting) to donors who have provided an email address. This means nonprofits will not have to generate receipts by alternate means (such as postal mail) if they do not have an email address on file.
Watch this space. We will continue to keep you posted as these new regulations are clarified or evolve.
It turns out that the majority of cardholders that call Mastercard to dispute a transaction are disputing recurring charges. Think: that 3-month free trial subscription you signed up for that automatically turned into a surprisingly high recurring bill. Let’s face it, some of the subscription-based billing on the market is not always transparent.
As a result, Mastercard established some new rules around disclosure of recurring payments to provide a better customer experience. These rules are specifically targeted at programs where there is recurring delivery of goods, either material or digital.
Here is a summary of Mastercard’s changes to its credit card processing policies, which go into effect September 22. Anyone who does recurring transactions must:
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Disclose the terms clearly
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Send an electronic confirmation with the terms immediately after the first transaction is made
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Send an electronic confirmation every time the card is charged with instructions on how to cancel should they wish
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Provide an online cancellation method or clear instructions on how to cancel online
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Send an electronic reminder 7-30 days before any transaction that happens every six months or less frequently
While Mastercard’s regulations are specified as being for recurring payments for physical products or digital goods, the Nonprofit Alliance has talked with Mastercard and they have indicated that the changes apply to all recurring transactions. Given that this chargeback issue is not limited to MasterCard, we presume that other card providers may be making similar changes as well.
THD is here to support you in navigating these changes. Some initial recommendations:
Audit and assess your current sustainer journeys. This includes making sure:
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You are clear at sign-up and in your initial communication that this is a monthly gift.
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You have a clear way for monthly donors to cancel posted online that your communications link to.
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Your payment processor is ready for these changes as well.
Add in post-transaction communications. Conventional wisdom was once not to remind people they were making a monthly donation. While this may no longer be possible, it does open the door for new communication opportunities:
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This new monthly touchpoint can and likely should go beyond tax receipt language to show the impact of their gift with a monthly thank you.
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This touchpoint could also take the place or meld with other communications in your monthly donor journey (e.g., upgrade or one-off donation emails).
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A recurring supporter who has opted out of email would now be able to receive 12 touchpoints without triggering CAN-SPAM laws because that legislation allows for content that facilitates an already agreed-upon transaction.
What about recurring supporters for whom you don’t have email addresses? Look into moving donors and additional data sources, including:
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Doing e-appends on sustainers for whom you don’t have email addresses, working with a trusted append partner such as SimioEnhance.
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Moving donors to EFT when possible. This could be a compelling opportunity to ask supporters to consider switching their payment from their credit card to an EFT via their bank account or a recurring debit from a donor advised fund.
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Consider mailing or texting supporters that are not emailable. We don't know how Mastercard will be enforcing these regulations, or what it recommends for these donors.
If you wish, talk to Mastercard. The Nonprofit Alliance (TNPA) is working to educate Mastercard about the impact on the missions of nonprofits. They are asking for nonprofits to:
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Share any data you have about how many recurring donations you process each month and how many of those result in chargebacks from the donor.
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Share if you have any contacts at Mastercard who might help navigate this decision-making and enforcement process.
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Join in signing the letter at https://www.surveymonkey.com/r/2F8GPKT so that Mastercard will see the breadth of impact on the nonprofit sector.
We hope this helps you begin navigating this evolving situation. We are here to help you address the next steps.
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The full regulations are available at https://www.mastercard.us/content/dam/public/mastercardcom/na/global-site/documents/transaction-processing-rules.pdf and the exact wording of these terms are on pages 185-186.
