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Mastercard Provides Clarification and Extension on Recurring Giving Rules

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On June 14, 2022, Mastercard introduced Transaction Processing Rules that include new requirements for subscription payments. These rules define subscriptions as resulting in “delivery of physical products or digital goods,” which created confusion as to whether the new requirements apply to recurring gifts made to nonprofit organizations, often known as nonprofit sustainer donor programs.

According to The Nonprofit Alliance (TNPA), which met with Mastercard to gain clarification on the new requirements, Mastercard has stated that it does intend for the new rules to apply to nonprofit sustainer donor programs.

TNPA also said that Mastercard has extended the effective date of the new regulations to March 21, 2023, for nonprofit organizations. The effective date was originally September 22, 2022.

If your organization has a recurring giving (sustainer donor) program, it is important to understand the new Mastercard recurring giving rules and how to comply with them.

Note that the new rules do not stem from a government regulation. They are a contractual matter with Mastercard, and only apply to donations that automatically recur. For example, a one-time gift made by using the “donate button” on a nonprofit’s website would not be considered a subscription payment.

The new requirements, which are outlined in Section 5.4.1 of the Transaction Processing Rules, require that organizations:

  • Disclose the donor’s selected donation amount and frequency when requesting credit card information as well as on any payment summary webpages. The Mastercard rules note that providing “a link to another webpage or requiring the Cardholder to expand a message box or scroll down the webpage to view the subscription terms does not satisfy this requirement.” In addition, donors must be asked to accept the subscription terms before completing the donation.
  • Send a subscription confirmation via email or “other electronic communication method” at the time of enrollment in recurring giving. The communication must include the subscription terms and instructions on how to cancel the subscription.
  • Provide a receipt, via email or “other electronic communication method,” after every successful billing. This must include instructions on how to cancel the subscription (the recurring donation). Note that according to TNPA, Mastercard has clarified that monthly notification (receipting) is only required for recurring donors who have provided an email address. However, it is not clear what the “other electronic communication method” in the rules refers to. TNPA said it is seeking clarification as to whether text message receipts would be acceptable.
  • Provide an online cancellation method or clear instructions on how to cancel that are “easily accessible online,” such as through a “Cancel Subscription” or “Manage Subscription” link on the organization’s home page.
  • For recurring payment plans that bill less frequently than every six months (180 days), send an electronic reminder outlining the terms of the subscription and instructions on how to cancel it seven to 30 days before the next scheduled donation date. The communication must reference in the subject line that it relates to upcoming charges, and the message “must be distinct from marketing communications.”

Mastercard has not disclosed penalties for noncompliance.

TNPA said it will work to gain further clarification from Mastercard on the details of compliance. We will provide more details if they become available, so stay tuned for updates. In the meantime, please contact us with any questions.

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