Mastercard Extends Deadline: How to Comply With New Recurring Giving Regulations

Editor's Note: Mastercard has updated its regulations again. Read our latest coverage here. 

There has been a lot of confusion over how Mastercard’s new subscription billing regulations will affect nonprofits. Nonprofits, platforms and processors were unsure if the rules even applied to nonprofits. On the nonprofit side, organizations were scrambling to be compliant. However, they were also reluctant to implement new costly strategies until they were sure they applied to nonprofits. Others had no clue the new regulations’ deadline was looming.

On Friday, Mastercard extended the deadline for its new recurring donor payment regulations by six months for nonprofits, according to The Nonprofit Alliance, which met with Mastercard officials a week prior to get clarification on the new rules and explain the strain they could have on the sector. Nonprofits now have until March 21, 2023 to become compliant. 

The nonprofit sector doesn’t view recurring gifts and subscriptions as synonymous and doesn’t account for a large amount of chargebacks — a suspected target of new rules. Mastercard understood the confusion and acknowledged that nonprofit chargebacks are “minuscule,” Shannon McCracken, CEO of The Nonprofit Alliance, said. 

“Their expectation for these requirements is consistent customer service across all of their Mastercard customers,” she said. “They see this as a best practice that they want implemented across the board.” 

There are more clarifications to come though. Her organization is continuing to work with nonprofits and Mastercard to clear up any remaining confusion on the regulations. 

“If we go by exactly how the requirements are written, or an interpretation of those requirements, then that could be more than what Mastercard really thinks is necessary and it's just because of the language they choose to write it — in the same way that “subscription” was so confusing for nonprofits' interpretation,” McCracken said. “So going back and just being very clear with Mastercard [by asking] ‘what is the expectation here?’ ‘What is it that nonprofits need to do to ensure that we are following the new requirements?’” 

On Aug. 19, a Mastercard spokesperson vowed to look into the confusion regarding whether nonprofits needed to comply with the rules for NonProfit PRO, but that spokesperson did not provide clarification or respond to subsequent emails following up for a comment for this article. 

Here’s a look at the new rules, and what your nonprofit needs to do to comply. 

1. Disclose the Recurring Gift Terms

Nonprofits must disclose the donor’s selected amount and frequency when requesting credit card information and on any payment summary webpages, according to Mastercard’s new regulations. They also must have donors accept those “terms” directly on the page before completing the donation. 

2. Email the Donor Immediately — And After Each Gift Processes

Immediately after a donor signs up for recurring giving, the nonprofit must send an email with the terms, as well as how to cancel the recurring gift, per Mastercard rules. The nonprofit must continue to send a donation confirmation with terms and cancellation instructions after each successful billing. 

Erica Waasdorp, NonProfit PRO contributor and recurring giving expert at A Direct Solution, sees the immediate email for new sustainers as a best practice. However, she used to advise nonprofits not to send their recurring donors monthly receipts. As a result of these new regulations, she now urges segmenting lists to ensure recurring donors receive the necessary receipts, possibly with a warm and fuzzy story integrated into the special communication. 

“If the system spits out a straight receipt, I recommend adding a special warm/fuzzy/grateful update email some other time during the month to really tell the recurring donor how his or her gift makes a difference,” Waasdorp said via email. “It could even be scheduled the day before the receipt email goes out.”

Additionally, for donors who give on a cadence that is less than every six months, nonprofits must send an electronic reminder to the cardholder between seven and 30 days before the next scheduled donation. The subject line should be something like, “Important Information About Upcoming Charges to Your Account,” to reference the upcoming charge. The email also must be distinct from typical marketing emails. 

“This may require a bit more collaboration between those who bring in new recurring donors versus those who are focused on retention and make sure that nothing falls through the cracks,” Waasdorp said via email. 

However, Mastercard did indicate, per The Nonprofit Alliance, that nonprofits will not be required to mail printed receipts if the donor did not provide an email address. 

“I’m delighted that nonprofits do not have to send mailed receipts because that would add a lot of extra work and expense, especially for those organizations that started generating recurring donors early on or that are still generating recurring donors by mail and phone,” Waasdorp said via email.

Mastercard references an “other electronic communication method” in its rules, and it’s still unclear what that includes. The Nonprofit Alliance plans to triple check with Mastercard whether text message receipts would be acceptable.

“What they explicitly sent to us is [sending a receipt] is only required where an organization has a valid, usable email address and permission from the donor to use it,” McCracken said.

3. Set Up an Online Cancellation Method

Nonprofits must create a way for donors to manage their subscriptions online, according to Mastercard regulations. It can be similar to an email unsubscribe process or an individual account that they can log in to manage the recurring gift. The nonprofit should also include a link to manage or cancel recurring gifts on its homepage. 

The Nonprofit Alliance indicated further clarification is needed on this one since many nonprofits do not provide sustainers logins to manage their recurring gifts. This profile management ability is often associated with subscriptions, such as streaming services. 

“That same sort of self-service portal or account access doesn't exist for most organizations in their donor bases, so being able to meet that specific requirement is a little bit of a different hoop to jump through for nonprofits than it would be for other subscription services,” McCracken said.

What’s Next?

Mastercard has not disclosed penalties for non-compliant nonprofits — or any merchants, McCracken said. She noted that nonprofits want to be compliant and now that they know the rules apply to them, they will begin that process and offered this advice: 

“Work with your processors, your platforms, your agencies because this rule applies to every nonprofit that has recurring donors … so learn from other processes or systems that are being put into place for other nonprofits like you who are working with those same partners,” McCracken said. “We should be looking for some efficiencies here. We should not all be recreating the wheels within our own shops.” 

Though the true impact of this rule change is not yet known, nonprofits have expressed concerns about the effect these rules could have on donor retention. McCracken explained how some donors opt for recurring giving to reduce the number of or type of communications. 

“It's more about programs and less about fundraising asks,” she said of sustainers’ preferences. “And so putting these transactional messages back into [a nonprofit’s email] queue and contacting them every month to say, ‘We've just processed your gift,’ feels like moving in the wrong direction for organizations that have tested out of that.”

So McCracken suggested engaging donors within the soon-to-be required receipts by sharing the gift’s impact, the organization’s gratitude for the donor’s loyalty or what the recurring gift means to the organization. 

“That is a real opportunity here that I think we need to look at as an opportunity rather than a hindrance because that is where we are right now with the regs,” she said.