New Mastercard Rules on Recurring Payments

Overview

On March 21, 2023, new rules from Mastercard will be going into effect. Per Mastercard's FAQ about the changes, their new rules for "subscription services" includes recurring donations and automatic renewal of memberships.

*Note: Previously, the deadline for compliance for all businesses was September 22, 2022. Per an update from Mastercard on September 2, 2022, however, the deadline has been extended, specifically for nonprofit organizations, to March 21, 2023.

The New Rules

(Source: Section 5.4.1, Subscription Billing Merchants, from the Mastercard Transaction Processing Rules)

1. Merchants must clearly disclose the basic terms of the subscription at the point of payment and capture the cardholder’s affirmative acceptance of the terms. The disclosure must include the price that will be billed and the frequency of the billing (for example, "You will be billed USD 9.95 per month until you cancel the subscription.")
   
   
2. Merchants must send a confirmation by email message or by any other electronic method at the time of enrollment in a subscription/recurring billing plan that provides the terms of the subscription, including the terms of a trial period when applicable, and clear instructions about how to cancel the subscription.
   
   
3. Merchants must send a receipt by email message or by any other electronic method after every billing that includes clear instructions for how to cancel the subscription.
   
   *Note: Per Mastercard's clarification on September 2, 2022, this requirement does not apply to donors who do not provide an email address. A nonprofit does not need to provide notification by other means, such as postal mail. 
   
   
4. Merchants must provide an online or electronic cancellation method (similar to unsubscribing from email messages or any other electronic method).
   
   
5. For any subscription/recurring payment plan that bills a cardholder less frequently than every six months (180 days), the merchant must send a notification no less than three days and no more than seven days before the billing date that includes the terms of the subscription and instructions about how a cardholder may cancel the subscription.

Is Neon CRM compliant with these rules? What do I need to do to be compliant?

1. Merchants must clearly disclose the basic terms of the subscription at the point of payment and capture the cardholder’s affirmative acceptance of the terms. The disclosure must include the price that will be billed and the frequency of the billing (for example, "You will be billed USD 9.95 per month until you cancel the subscription.")

Neon CRM's donation and membership forms are compliant with this rule.

2. Merchants must send a confirmation by email message or by any other electronic method at the time of enrollment in a subscription/recurring billing plan that provides the terms of the subscription, including the terms of a trial period when applicable, and clear instructions about how to cancel the subscription.

Because it is possible to turn on auto-renewal for a membership midway through the membership term or create a recurring donation schedule with a first payment date sometime in the future, Neon CRM needed to make some updates to comply with this requirement and offer an additional email notification beyond the standard Donation Appreciation email and Membership Registration/Renewal emails.

With our product release on September 3, 2022, three new system emails will be added to Neon CRM. Find them under Global Settings > System Emails. Two of them pertain to this requirement, while the third (Recurring Donation Notice system email) is mentioned later in this guide.

The new Recurring Donation Schedule Created system email will be sent whenever a new recurring donation is set up, whether the first donation is processed immediately or later. 

Similarly, the new Membership Auto-Renewal Enabled system email will be sent whenever a member turns on auto-renewal for their membership, whether that is at the time when they purchase their membership or later during the membership term. 

Recommended Steps:

• Log in to your Neon CRM system and go to Global Settings > System Emails. Review the Neon CRM Standard Versions of the new Recurring Donation Schedule Created and/or Membership Auto-Renewal Enabled system emails (Click "View" to preview). 
• If you would like to make changes to the standard versions, these new emails can be replaced with custom email versions as needed. See our guide for system emails here.
• When you are happy with the content of the new emails, make sure they are turned "On" with the blue toggle in the right-hand column of the System Emails page (see screenshots above). 

3. Merchants must send a receipt by email message or by any other electronic method after every billing that includes clear instructions for how to cancel the subscription.

Neon CRM can automatically send email receipts to recurring donors and auto-renewing members. Go to Global Settings > System Emails to confirm that your Donation Appreciation system email and Membership Renewal Completion Notice system emails are turned on. 

However, your emails may not already include a statement about the recurring donation / auto-renewal terms and how to adjust them. 

Recommended Steps:

1. Go to Global Settings > System Emails. Click into "View Settings and Versions" for each of the emails you need to update (Donation Appreciation for recurring donations, Membership Renewal Completion Notice for auto-renewing members).
2. Inside each email, build a new version of the email specifically designed for recurring donors or auto-renewing members. You might want to add some language like: "Thank you for supporting [Organization Name] as a sustaining donor/member! If you need to adjust your recurring donation/membership auto-renewal settings or payment information, visit our Donor/Member Portal [Link to the Login Page]." Finalize the new email(s) and mark them "Ready to Send."
3. The last step is setting up a way for Neon to automatically send your new email versions only to recurring donors and auto-renewing members, not other donors/members. To do this, click "New Email Condition."
4. For your Donation Appreciation email, set your new email version to send when Recurring Frequency is "In Range Of" all of the possible frequencies. For your Membership Renewal Confirmation email, set your new email version to sen when Auto-Renewal is equal to "Yes."
5. Save your condition(s). If you have other system email conditions set up, make sure to click "Edit Precedence of Conditions" and move your new condition to the top of the list, so that it will always be the version sent for auto-renewal and recurring payments. 

Note for your Donation Appreciation system email: If you currently have an email condition set up with the criteria "Donated Created By Recurring Donation," you may have some existing conditions either preventing emails from being sent to your recurring donors for every payment, or ensuring that they receive a specific version of the email. Review this condition carefully - under the new Mastercard requirements, receipts must be sent for every payment.

Full guide to managing System Email Version and Conditions here.

4. Merchants must provide an online or electronic cancellation method (similar to unsubscribing from email messages or any other electronic method).

This rule is covered by the Neon CRM Constituent Login Portal. More details about the Portal here.

5. For any subscription/recurring payment plan that bills a cardholder less frequently than every six months (180 days), the merchant must send a notification no less than three days and no more than seven days before the billing date that includes the terms of the subscription and instructions about how a cardholder may cancel the subscription.

For recurring donations, this rule is covered by the new Recurring Donation Notice system email. However, you might not want to send notifications and receipts to your monthly donors - that's a lot of email every month! The Mastercard rule only applies to donors giving on a 6-month or annual recurring schedule, so with a few adjustments you can set the email to only send when required. 

Recommended Steps - Recurring Donations:

1. Go to Global Settings > System Emails and turn on the new Recurring Donation Notice system email. If you would like to send this notice to all recurring donors for every payment, you're all set!
2. If you would prefer to send this only to recurring donors paying on a 6 Months or 1 Year schedule, click on View Settings & Versions > and set up a new email condition. Select "Do not send email for this special condition," and set the condition to Recurring Frequency In Range Of: Weekly, Every 2 Weeks, Monthly, Every 2 Months, Quarterly"
3. When your condition looks like the example below, click "Submit", then go back to the System Emails list and turn the email on. This condition will prevent notices from being sent for any recurring donors giving more frequently than every 180 days. 

For auto-renewing memberships, this rule is covered by the Membership Auto-Renewal Notice system email. You may want to set up this email to only send to members with a term longer than 6 months - if you have 1 Month memberships with auto-renew, that's a lot of email notifications! Mastercard only requires these notices for terms longer than 180 days. 

Recommended Steps - Membership Auto-Renewal: 

1. Go to Global Settings > System Emails. Check whether your Membership Auto-Renewal Notice email is turned on. If it is, you're all set! 
2. If the email is turned off but your membership terms are all 6 months or longer, turn the email on and you're all set!
3. If the email is turned off AND you have some membership terms that are shorter than 6 months AND you would prefer not send renewal notices for those memberships, click "New Email Condition."
4. Select "Do not send email for this special condition", then set the condition to Membership Term "In Range Of". In the pop-up window, check off all of your membership options that are shorter than 180 days. 
5. When your condition looks like the example below (except with your shorter membership terms instead of ours), click Submit. Then, go back to the System Emails list and turn on the email. This condition will prevent notices from being send to members renewing more frequently than every 6 months.