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New Mastercard Rules and Exemptions for Nonprofits
2 min to read ✭ There has been a lot of talk around the new Mastercard rules for nonprofits. We have the most recent update as of October 22, 2022. Nonprofits are exempt from these rules! Learn more in this blog.
If you’re slightly confused about the recent developments around the new Mastercard rules and how they affect your nonprofit, you’re not alone!
Back in September 2022, Mastercard announced new requirements that would impact nonprofits offering recurring giving. While these rules were intended to provide transparency around subscription billing, Mastercard clarified that recurring giving (classified as subscriptions) fell into the scope of the new rules. These rules were slated to take effect at the beginning of September 2022 but were extended until March 2023. However, in light of concerns shared by many nonprofit groups, Mastercard has issued a new, nonprofit-specific policy.
So, what does this all mean and where do nonprofits land? As of October 11, 2022, Mastercard has announced that nonprofits will be largely exempt from these changes!
What Are The New Mastercard Rules?
Below is an overview of the new recommended procedures for recurring donations.
In short, nonprofits need to inform their recurring donors about recurring payments. However, monthly notifications (receipting) will only be required for donors who have provided an email address.
Rule #1: Disclose the Terms of a Recurring Gift
At the time of enrollment, a nonprofit must send a confirmation email to their donor that includes the terms of the recurring gift (billing amount and frequency) and instructions on how to cancel their gift.
Rule #2: Send an Immediate Confirmation Message to the Donor
Every time a recurring donation is charged, a nonprofit must send the donor a receipt that restates the terms and includes clear instructions on how to cancel their gift.
Rule #3: Offer a Reminder for Payments that are Processed More Than Six Months Apart
For recurring payments that are billed more than six months apart (i.e. annual donations), a nonprofit must send a notification with the terms of the plan and instructions on how to cancel at least seven days (but no more than 30 days) in advance of the next billing date. The subject line of these notifications must reference upcoming charges and be distinct from other marketing communications.
Rule #4: Set Up an Online Cancellation Method
A nonprofit must provide recurring donors with a way to cancel their recurring gift online (similar to unsubscribing from emails). It must be easily accessible; nonprofits have the option of including a “Manage Recurring Donation” or “Cancel Recurring Donation” link on their homepage.
What Should Nonprofits Do About This Change?
While nonprofits are exempt from the new recurring payment regulations, these rules will apply to organizations and charities that have excessive chargebacks for four consecutive months (as identified in the ACMP).
Nonprofits should consult with their donation platform vendor to see if they comply with the new rules.
Also, note that it is still unclear about the stipulations of how nonprofits will be exempt from all of these rules. So stay in the in-the-know by subscribing to our newsletter where we will keep you updated!
What Donation Platforms Are Doing
To ensure compliance with Mastercard requirements, donation platforms such as FundraiseUp and Classy are already geared up for the change.
FundraiseUp customers do not need to take any action at this time as the platform is in compliance with the Mastercard rules outlined above. Classy on the other hand has taken steps to implement email notifications to donors seven days prior to billing and they’ve added a “manage your donation” block to all recurring giving emails.
To determine the scope of your compliance with the new Mastercard rules, we recommend consulting with your platform vendor directly.