New Mastercard fraud and chargeback rules increase charges for long-term offenders


New Mastercard fraud and chargebacks rules were previewed at the G2 Risk Conference in London earlier this month.

Monneo attended the conference to keep up-to-date with changes to regulations that may affect online merchants that use its virtual IBAN service.

The changes will see Mastercard leverage its own Data Integrity Platform to streamline processes and identify merchants that exceed its Excessive Chargeback Program (ECP) threshold.  Acquirers will no longer need to report merchants that exceed the ECP threshold to Mastercard.

A new assessment fee structure is being introduced for acquirers with merchants who are identified as a High Excessive Chargeback Merchant (HECM) and have been in the programme for at least four months.

The change means the end of Mastercard’s Chargeback Monitoring Merchant (CMM) threshold and an adjustment to the current Excessive Chargeback Merchant (ECM) threshold. There are also changes in the Fraud program (EFM) which is monitored by the acquirers in parallel.

The assessment structure was previously driven by the number of chargebacks and basis points the merchant has regardless of how long they have been in violating of threshold limits. The new rules will encourage both acquirers and merchants to resolve problems quickly as the primary focus will be on the length of time a merchant remains in the programme.

Migration to the Data Integrity Platform began in November 2019 with the new assessment structure going live in May 2020 for April violation month. Mastercard will alert acquirers each month if and when any of their merchant exceeds ECP thresholds.

At the G2 Risk Conference, Mastercard stated that the changes will mean Acquirers will be better able to predict potential ECP related assessments when managing collateral requirements for merchants with excessive chargeback levels.

The new rules are another clear example of how fraud is becoming further isolated and penalised in the payments ecosystem. Merchants who are trading legitimately but currently have a high number of outstanding chargebacks must devote additional resources and act quickly to remedy the situation to avoid escalating fees after May 2020.