Last month, we wrote about how Mastercard’s announced transaction processing requirements would affect nonprofits that offer recurring donations. Today we learned that Mastercard is exempting nonprofits and charities from the new recurring payment regulations. The only organizations at risk are those that have excessive chargebacks for four consecutive months. Instead of imposing new requirements on nonprofits as of the previously announced implementation date of March 22, 2023, the new standards are now optional recommendations for nonprofits, effective immediately.
Again, there will no longer be requirements for nonprofits but are still recommended as best practices by Mastercard, and as wise donor stewardship by our agency.
You might have heard about updated Mastercard rules impacting recurring giving for nonprofits. Mastercard is requiring nonprofits to implement its new credit card processing policies for recurring donations for which the donor has an email address, starting March 21, 2023. These rules aim to add transparency for cardholders and reduce chargebacks.
Here’s a look at the new rules for recurring (monthly) gifts, and what your nonprofit needs to do to comply.
- Disclose full subscription terms at the time of a recurring gift subscription, including the price that will be billed and the frequency of the billing (for example, “You will be billed $X per month until you cancel the recurring donation.“).
- Send a confirmation by email when a donor enrolls in a recurring donation plan that provides the subscription terms, a transaction receipt, and clear instructions about modifying/canceling the gift. Cardholders may choose to opt-out of receiving these notices.
- Provide an online cancellation method that is easily accessible for donors to manage and/or end their recurring donation as they see fit, at any time they wish to do so (such as a “Manage Recurring Donation” link on your giving page).
Also, if you have donors who have recurring gifts with less frequency (quarterly, biannually), Mastercard is requiring that the nonprofit send an electronic reminder 7-30 days before the billing date that includes donation terms and instructions on how to cancel.
While implementing these new standards will take some time and diligence, we see this as a terrific opportunity to further engage with our monthly donors through the increased mandatory contacts and transparency. Some nonprofits believe that offering donors an easy way to cancel their sustaining gifts will lead to a significant loss of donors and revenue. However, more frequent communications are an opportunity to share the impact of your donors’ gifts, highlight your organization’s achievements, and communicate an ongoing need that helps donors feel more connected and engaged with your mission.
Our initial recommendations for nonprofits to consider are:
- Sending more personalized post-transaction communications to further donor engagement.
- Creating opportunities for your monthly donors to choose an EFT option for making their monthly gifts, making gift renewal and ongoing communication easier.
As you develop your approach on how to address these policy changes, we strongly encourage you to speak to your organization’s legal counsel to determine the best path forward. Full regulations can be found here.
Edge Direct is here to partner with and support our nonprofit clients however they choose to address these new changes. We will continue to prioritize the evolution and improvement of the donor experience so you can build trusting relationships with your donors that lead to loyal supporters.