Mastercard Rules: What Nonprofits Need to Know About Recurring Donations

In the age of digital transformation, the way we make payments and donations has evolved tremendously.

Mastercard, one of the leading global payment networks, continually updates its policies and rules to provide a secure and seamless experience for customers and businesses.

Recently, Mastercard introduced new rules for recurring donations, which are particularly relevant for nonprofit organizations.

Here's what you can do to ensure compliance.

Understanding the new Mastercard rules

Mastercard's new recurring donations rules aim to improve organizational transparency and give consumers greater control over their subscription-based services.

While they went into effect last year for many companies, nonprofits had until March 21, 2023 to implement new subscription billing notifications to remain compliant.

The new rules affect all companies and organizations that offer recurring donations, such as subscriptions and memberships.

Critical aspects of the new rules include:

1. Enhanced communication

Organizations must now provide clear and detailed communication to customers about the terms of their recurring donations.

This includes the amount, frequency, and duration of the donations.

2. Transaction receipts

Organizations must send a digital receipt to the customer for every transaction.

This receipt should include information about the transaction, the cancellation policy, and instructions on how to cancel the service.

3. Reminder notifications

Organizations must send a reminder notification to customers at least 7 days before a recurring donation is due for recurring donations that process more than 180 days apart.

This reminder should include the upcoming charge amount, the transaction date, and instructions on how to cancel the service.

4. Cancellation rights

Customers must be able to easily cancel their subscription or recurring donation through a simple online process or by contacting the merchant.

Impact on nonprofit organizations

If you are an Anedot customer, you do not need to do anything other than be aware of these requirements.

Anedot sends out transaction receipts and reminder notifications to stay compliant, so you don't need to worry about it.

However, you should be aware of the following:

1. Enhanced communication requirements

Nonprofits must now ensure that their communication materials, such as email campaigns and website content, include all the required information about their recurring donations, including the terms and conditions.

2. Potential impact on donor retention

‍As donors become more aware of their rights to cancel recurring donations, nonprofits may see an increase in cancellations.

This makes it even more crucial for nonprofits to demonstrate the value and impact of their work to encourage donor retention.

Adapting to the new Mastercard rules

Nonprofits should take the following steps to ensure compliance with Mastercard's new recurring donation rules:

1. Review and update communication materials

‍Review all materials related to recurring donations and ensure they include the necessary information, such as the terms and conditions, cancellation policy, and instructions on how to cancel.

2. Implement systems for transaction receipts and reminders

‍Optimally, your payment processor or fundraising software will already be compliant with Mastercard's rules.

At Anedot, we have updated our platform to be compliant to these new rules.

However, if your payment processor is not compliant, you will need to develop or adapt your existing systems to send transaction receipts and reminder notifications to donors.

3. Strengthen donor engagement

‍To mitigate the potential impact on donor retention, focus on strengthening your donor engagement strategies.

This includes sharing regular updates on your organization's work, highlighting the impact of donations, and fostering strong relationships with your supporters.

4. Monitor and evaluate

Regularly monitor and evaluate the impact of the new rules on your recurring donations and donor retention rates.

This will help you identify areas for improvement and adapt your strategies accordingly.

Closing thoughts

Mastercard's new recurring donation rules are designed to improve transparency and give supporters greater control over their recurring donations.

While these rules may create some initial challenges for nonprofit organizations, they also present an opportunity to strengthen donor engagement and trust.