Mastercard is walking back its Sept. 22 deadline to classify sustainer donations made via credit card as subscriptions, which would require giving those donors a notice every month of their option to cancel.
Mastercard is now “extending the effective date of these requirements for nonprofits until March 21, 2023,” according to Shannon McCracken, CEO of The Nonprofit Alliance. “This extension is an acknowledgement that the new requirements as written caused considerable confusion among nonprofits and their processing platform partners, delaying steps toward compliance.”
Nonprofits are required to comply with the new subscription payment requirements, but now have an additional six months to prepare.
The delay also gives nonprofit leaders time to convince Mastercard executives to hear the impact on nonprofits of the new regulations. McCracken stressed that the donor-nonprofit relationship is distinct from that of a consumer and merchant or vendor.
Additionally, monthly notification (receipting) is only required for donors who have provided an email address. Nonprofits will not need to generate receipts by alternate means (such as postal mail) for recurring donors whose email addresses are not available. This will amount to considerable cost savings for many organizations, McCracken said.
Mastercard has classified monthly recurring donations as “subscription services” which would and will force fundraisers to alert sustaining donors every month of their cancellation option.
Mastercard’s new regulations are an attempt to cut down on credit card fraud and reduce chargebacks – disputes with consumers over monthly subscription fees or efforts to cancel services. The regulations lump nonprofit in with merchants, suppliers of streaming services and magazine, health club and other subscriptions.