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 |
|
| 1,000 or more | EUR/USD 50,000 or more | 50 or more |
|
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.
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 | Croatia | Denmark |
| Gibraltar | Iceland | Latvia |
| Netherlands | Portugal | Slovenia |
| Belgium | Cyprus | Estonia |
| Greece | Ireland | Lithuania |
| Norway | Romania | Spain |
| Bulgaria | Czech Republic | Finland |
| Hungary | Italy | Luxembourg |
| Poland | Slovakia | Sweden |
| United Kingdom | Malta | France |
Regulated Countries
| Albania | Azerbaijan | Channel Islands |
| Israel | Kyrgyzstan | Montenegro |
| Serbia | Turkmenistan | Vatican City |
| Andorra | Belarus | Georgia |
| Kazakhstan | Macedonia | Russian Federation |
| Tajikistan | Ukraine | Isle of Man |
| Armenia | Bosnia and Herzegovina | San Marino |
| Kosovo | Moldova | |
| Turkey | Uzbekistan |
