What Mastercard’s new subscription billing rules mean for your nonprofit

Mastercard has updated its guidance for nonprofits regarding the new subscription billing rules. If you receive recurring donations, then this impacts you. Read on to learn about these new rules and how this impacts your campaigns on Raisely.

TLDR

• Mastercard has released two sets of rules updates in 2022.
• While not explicitly stated in the processing rules document, Mastercard has confirmed that recurring donations are classified as subscriptions and fall within the scope of the new rules.
• Raisely’s platform meets the rules applicable to nonprofits.
• Mastercard’s new rules take effect September 22, 2022 March 21, 2023.
• Our support team is available to provide you additional help to ensure you are compliant with these rules.

What are the rules?

Mastercard has recently revised its “Transaction Processing Rules” (page 185), aimed at providing consumers with additional clarity and transparency about subscription billing terms and to reduce billing errors. The rules apply to merchants "performing subscription billing in which the Cardholder has agreed for the Merchant to provide ongoing and/or periodic delivery of physical products or Digital Goods.”

The rules affecting nonprofits include:

1. A confirmation email must be sent to the subscriber at the time of the initial recurring payment. This must include the full terms of the subscription, such as the total cost and frequency of charges.
2. Merchants must send a receipt after each billing that includes clear instructions on how to cancel, unless the customer opts out.
3. Merchants must provide an online cancellation method or clear instructions for cancellation that are easily accessible on the merchant's website.
4. For recurring billings six months or more apart, merchants must notify the customer of the upcoming charge and provide cancellation information between seven and 30 days before the billing.

What’s the context behind the revised Mastercard subscription rules?

The subscription economy has become the norm, with most of us enjoying the convenience and personalisation it offers. For charities, regular giving is huge in predicting annual revenue and retaining donors. However, this growth has also brought a rise of subscription chargebacks being filed by cardholders. The set-it-and-forget-it process hasn’t served all parties well.

Data from a Mastercard survey suggests that recurring transactions have been attracting a significant share of the chargebacks filed by their customers as well.

• 60 percent of chargebacks filed on the Mastercard network were related to recurring payments.
• 76 percent of chargebacks involving a recurring payment were disputed by the cardholder, stating they did not authorise the transaction charged to their cards.

Amidst these rising chargebacks, Mastercard intervened to introduce greater transparency into the recurring payments ecosystem.

What does this mean for Raisely?

Thankfully, regular giving on Raisely is already set up to address all four of the above rules. With that said, it could be more more seamless, with less effort required on your end. Below we’ve outlined instructions to help you remain compliant, with updates on what we are working on to make it even easier.

A confirmation email must be sent to the subscriber at the time of the initial recurring payment. This must include the full terms of the subscription, such as the total cost and frequency of charges.

Raisely has two default messages, sent to Regular Givers upon initial payment. These include the  Regular Donation Welcome & Regular Donation Receipt. These are able to be customised to contain necessary information.

Merchants must send a receipt after each billing that includes clear instructions on how to cancel, unless the customer opts out.

Raisely's default receipt message contains access link to the donors account, enabling them to manage/cancel their account online.

Merchants must provide an online cancellation method or clear instructions for cancellation that are easily accessible on the merchant's website.

Donors can access their account details through their user login. Ensuring the Raisely campaign Login page is made accessible to donors is encouraged.

For recurring billings six months or more apart, merchants must notify the customer of the upcoming charge and provide cancellation information between seven and 30 days before the billing.

Though uncommon for many, yearly frequency options can be setup in Raisely's donation form. You can access necessary data with a Regular Donation Report, seeing both which Donation Schedule (referring to frequency) and Next Payment. With this data you can develop scheduled messages with Raisely or with a 3rd-party message solution.

*We are working on a new default message to remind regular donors that a charge is coming up if the interval between donations is > 180 days.

Read our support article with more instructions.

Regular giving on Raisely

Welcoming, managing and engaging your recurring donors should be a breeze! We’re here to help bring the ease back so you can work on increasing your predictable fundraising revenue.

If the above is a bit too much information, please don’t hesitate to contact our support team are more than happy to help!