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In October 2019, Mastercard announced they would be revising standards for their Excessive Fraud Merchant (EFM) and Excessive Chargeback Merchant (ECM) programs. These programs set out the thresholds which define whether or not merchants have too many instances of chargebacks or fraud. Changes to the programs were scheduled to take effect in April 2020. While some of the requirements have come into place, Mastercard has postponed some aspects due to the current world health situation in managing COVID-19.
The EFM program works to reduce fraud on e-commerce transactions and to create a more secure environment for both merchants and cardholders. The ECM program’s purpose is to reduce chargebacks and to strengthen the integrity of the Mastercard network.
At its core, both programs require merchants to remain below certain levels related to fraud or chargebacks. If merchants exceed them in any given month, they are entered into the relevant program and fined. Fines can be severe and range anywhere from USD 500 to USD 200,000. Penalties increase in severity by either how many months a merchant meets conditions or how many chargebacks the merchant receives.
EFM program thresholds are:
Fines are suspended for 6 months. Fining will begin in November 2020 for violations occurring in October 2020. Mastercard is continuing to monitor merchant fraud activity in line with the program between now and then. At Truevo, we notify our clients if merchants exceed the limits of this program.
There are 2 levels of this category, ECM and High ECM. Merchants are entered into the program when the two conditions listed for each program are met.
ECM conditions include:
High ECM conditions include:
These changes are in place for all industries except some of those most affected by COVID-19. These include airlines, cruise lines, railways and travel agents. For merchants working within these industries, the program does not take effect until August 1st, 2020.
If you have any questions regarding the changes in Mastercard’s EFM or ECM programs or about the postponements related to COVID-19, reach out to your Acquirer who will have these changes in front of them and be able to help you navigate through the updates.
Disclaimer: This content has been written for informational purposes only. It should not be construed as legal or business advice.
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