TABLE OF CONTENTS

About Mastercard monitoring programs


    Mastercard’s Excessive Chargeback Program (ECP) consists of two levels: Excessive Chargeback Merchant (ECM) and High Excessive Chargeback Merchant (HECM), and it applies to users in all supported countries. 


Mastercard requires merchants to maintain a chargeback rate of less than 1.5% of transactions. Merchants who exceed that limit, and who see more than 100 chargebacks per month, qualify as an excessive chargeback merchant.


    The card network will give merchants one label or the other based on whether they breach the predetermined thresholds for monthly chargeback issuances outlined below:



Number of Monthly Chargebacks
Monthly Chargebacks (% of Total Transactions)
Excessive Chargeback Merchant Program100 to 299    

1.5% to 2.99%

High Excessive Chargeback Merchant Program300 or more    

3% or more


    To determine whether or not you’re in danger, you need to know your Mastercard chargeback-to-transaction ratio (also known as a chargeback rate).


    Your Mastercard chargeback rate determines the number of Mastercard chargebacks filed against you in a single month. You can find this by taking the number of chargebacks issued during the month in question, then dividing it by the number of total transactions processed during the previous month.


ECP: Mastercard Excessive Chargeback Program

    The Excessive Chargeback Merchant program is targeted at streamlining enforcement and facilitating faster communication between acquirers and the card network. The goal is to make merchant compliance a more accurate process with greater accountability.


Users are placed into ECP if they meet or exceed the thresholds for the following criteria:

  • The total number of Mastercard payments that have been disputed (chargeback count)
  • The chargeback-to-transaction ratio (chargeback rate)

The chargeback rate is a ratio of disputed payments to all payments. It’s calculated as the number of Mastercard disputes received in a calendar month compared to the total number of Mastercard payments from the preceding month. You must exceed both thresholds to qualify for ECM.


ECM: Mastercard Excessive Chargeback Merchant

    The Excessive Chargeback Merchant program is a chargeback compliance scheme created by Mastercard. The purpose of the program is to exercise oversight in regards to eCommerce merchant activity and prevent excessive chargebacks from occurring on the Mastercard network. This is achieved by imposing penalties on merchants for noncompliance.


    Threshold: minimum 100 chargebacks in a calendar month and a monthly CTR equal to or in excess of 1.50%

(150 basis points);

Fines assessed beginning in a second consecutive month based on MasterCard’s Fine Assessment Structure table,

referenced below.


Number of Months Above ECM Thresholds    
Assessment if ECM in Violation Month (100-299 Chargebacks and 150-299 Basis Points)

 Issuer Recovery Assessment

10

No

2EUR/USD 1,000    

No

3EUR/USD 1,000    

No

4 to 6    EUR/USD 5,000    Yes
7 to 11    EUR/USD 25,000    Yes
12 to 18    EUR/USD 50,000    Yes
19 +EUR/USD 100,000    Yes


HECM: Mastercard High Excessive Chargeback Merchant

Threshold: minimum of 300 chargebacks in a calendar month and a monthly CTR equal to or greater than 3.00%

(300 basis points);

Fines assessed beginning in a second consecutive month based on MasterCard’s Fine Assessment Structure table,

referenced below.


Number of Months Above ECM Thresholds    

Assessment if High Excessive (HECM) in Violation Month Chargebacks and Greater than 300 Basis Points)

 Issuer Recovery Assessment

10

No

2EUR/USD 1,000    

No

3EUR/USD 2,000    

No

4 to 6    EUR/USD 10,000    Yes
7 to 11    EUR/USD 50,000    Yes
12 to 18    EUR/USD 100,000    Yes
19 +EUR/USD 200,000    Yes


EFM: Mastercard Excessive Fraud Merchant Compliance Program

    The Excessive Fraud Merchant program is targeted at streamlining enforcement and facilitating faster communication between acquirers and the card network. The goal is to make merchant compliance a more accurate process with greater accountability.


You’re placed into the EFM programme if you meet or exceed the thresholds for the following criteria:

  • Number of e-commerce Mastercard payments
  • The total volume in US dollars of Mastercard payments that result in fraudulent chargebacks (net fraud volume) is calculated by dispute reason code (reason code 4837 and 4863)
  • The fraud-count-to-transaction ratio (fraud chargeback rate)
  • The ratio of 3DS Mastercard payments to all Mastercard payments

The fraud chargeback rate uses a similar calculation to the chargeback rate found in ECM or HECM. The only difference is that the fraud chargeback rate is calculated using only fraudulent chargebacks.


EFM applies to users who meet all of the following conditions:

  • Minimum of 1,000 e-commerce Mastercard payments
  • Net fraud volume is greater than 50,000 USD
  • Fraud chargeback rate is greater than 0.50%
  • Total 3DS Mastercard payment count is less than 10% of total Mastercard payment count


Number of Months Above EFM Thresholds    

Violation Assessment


10
2

EUR/USD 500

3

EUR/USD 1,000

4 to 6    

EUR/USD 5,000

7 to 11    

EUR/USD 25,000

12 to 18    

EUR/USD 50,000

19 +    

EUR/USD 100,000


    If Mastercard determines that the merchant is subject to the EFM program, there’s no way to appeal the decision or avoid the resulting penalties. At that point, the only option is to try and get one’s fraud incidents below the acceptable thresholds.


Protect Your Business Against Mastercard Chargebacks

    So what can you do to protect your business long-term? First, note that many chargebacks—between 60% and 80%—are potential cases of friendly fraud. You have the right to challenge these invalid chargebacks through the representment process. If you contest a customer dispute and win, you can recapture a portion of the amount disputed.


    Unfortunately, even a successful representment can’t undo the impact of a chargeback on your chargeback ratio. This is because chargeback rates are calculated using the total number of chargebacks issued, regardless of whether they get reversed later. That’s why it’s crucial that you do everything possible to prevent chargebacks before they happen.