Mastercard Chargeback Programs: 2020 Update

Quite recently, Mastercard has announced updates in its fraud and chargeback merchant compliance programs.

We would like to take the opportunity to familiarize you with these new standards.

Excessive Fraud Merchant

New updates to the Mastercard Excessive Fraud Merchant (EFM) Compliance Program has become effective. These changes are in effect globally, including Europe with the exception of merchants in Germany, Liechtenstein, and Switzerland.

Background of the EFM Compliance Program

The EFM Compliance Program helps reduce fraud for e-commerce transactions and secure the ecosystem, providing a better experience for cardholders and ultimately an increase in approval rates for all participants. The Program measures compliance at the merchant ID (MID) level and sends the notifications and potential financial assessments to the acquirer.

Overview of Revised Standards

The Program will be updated to include two separate compliance frameworks that will be used globally, one framework for regulated countries* (see Appendix below) and a separate framework for non-regulated countries** (see Appendix below), where the term non-regulated refers to those countries without a legal or regulatory requirement for strong cardholder authentication.

The only difference between the two frameworks will be the 3-D Secure (3DS) percent threshold.

EFM Monthly Criteria

Number of Transactions

Fraud Chargeback Amount

Fraud Chargeback Basis Points

3DS Utilization
(including Data Only Tax)

1,000 or more

EUR/USD 50,000 or more

50 or more

• Less than 10% (Nonregulated Countries)
• Less than 50% (Regulated Countries)

Excessive Chargeback Merchant

Excessive Chargeback Merchant (ECM) program monitors merchants that receive an excessive number of chargebacks on a monthly basis. Merchants will be evaluated under two categories—Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM). Mastercard automatically tracks chargebacks for all transactions through network data and notifies acquirers when an individual merchant ID has breached the compliance threshold.

EFM and HECM Monthly Criteria

Monthly Criteria

Number of Chargebacks

Basis Points

ECM

100 to 299

150 to 299

HECM

300 or more

300 or more

Mastercard has already started monitoring transactions for EFM and ECM violations, therefore we kindly remind you to stay focused on your transaction compliance as the assessment fines are rather high:

Any Merchant ID exceeding the EFM threshold will be fined EUR 25 000.

The EFM Assessment will depend on the number of months above EFM thresholds. The fines start at EUR 500 for two months of noncompliance and may reach up to EUR 100,000 (for 19+ months).

Please reach out to us if you need more information regarding these two programs or anything else relevant to chargebacks.

Appendix 1: Regulated and Non-regulated countries

Below are some examples of regulated and non-regulated countries. For the complete list please email your Account Manager.

Europe Region

Regulated Countries

Austria

Gibraltar

Netherlands

Belgium

Greece

Norway

Bulgaria

Hungary

Poland

Croatia

Iceland

Portugal

Cyprus

Ireland

Romania

Czech Republic

Italy

Slovakia

Denmark

Latvia

Slovenia

Estonia

Lithuania

Spain

Finland

Luxembourg

Sweden

France

Malta

United Kingdom


Non-Regulated Countries

Albania

Israel

Serbia

Andorra

Kazakhstan

Tajikistan

Armenia

Kosovo

Turkey

Azerbaijan

Kyrgyzstan

Turkmenistan

Belarus

Macedonia

Ukraine

Bosnia and Herzegovina

Moldova

Uzbekistan

Channel Islands

Montenegro

Vatican City

Georgia

Russian Federation

Isle of Man

San Marino


United States Region

The United States is a non-regulated country.

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