• Latest
Understanding Mastercard Excessive Chargeback Program and How to Avoid It

Understanding Mastercard Excessive Chargeback Program and How to Avoid It

April 2, 2021
Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud (Pt. 2)

February 22, 2023
Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

February 15, 2023
Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

February 7, 2023
Curbing emerging fraud types with network intelligence and data enrichment

Curbing emerging fraud types with network intelligence and data enrichment

January 31, 2023
Policy Abuse Fraud: What Is It and How to Protect Against It

nSure.ai Delivers Growth to Digital Commerce Leaders and Boosts YoY Revenue by 280%

January 25, 2023
Fraugster and Refurbed partner to increase approval rates and reduce fraud for refurbished electronics marketplace

Sift Appoints Former Ping Identity COO Kris Nagel as CEO

January 20, 2023
Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

January 19, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud

January 10, 2023
How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

January 6, 2023
  • Contribute
  • Contact Us
  • About
  • Join Us
  • Advertise
Wednesday, March 29, 2023
Merchant Fraud Journal
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
Merchant Fraud Journal
No Result
View All Result

Understanding Mastercard Excessive Chargeback Program and How to Avoid It

by Bradley
April 2, 2021
in Articles, Chargebacks
Understanding Mastercard Excessive Chargeback Program and How to Avoid It

As the name implies, the MasterCard Excessive Chargeback Program (ECP) is a predetermined chargeback threshold that helps acquirers to evaluate and predict merchants’ chargeback risks.

To help promote reliable, simple, and safe commerce for all stakeholders, Mastercard established a standard chargeback-to-transaction ratio threshold that should guide payment processors in their relationship with merchants. 

With the ECP, Mastercard aims to reduce chargebacks and make its payment system seamless for users. Mastercard determines a merchant’s excessive chargeback ratio by calculating the current month’s first chargebacks and dividing it by the total number of transactions in the prior month. 

Example: The first 20 chargebacks received in January divided by 200 sales in December = Chargeback Ratio of 0.1 percent. In this case, Mastercard will use 0.1% as your basis point or chargeback ratio for the period. 

Mastercard does not take the second chargebacks, also known as pre-arbitration chargebacks and retrievals, into consideration in the calculation. However, they will track won chargebacks in the analysis. Regardless of the outcome, when a chargeback issues, they count it in determining the ratio.

Before we take a deep dive into understanding the Mastercard Excessive Chargeback Program’s makeup, let’s take a quick look at the Mastercard Fraud Monitoring Program.

The Mastercard Fraud Monitoring Program has three thresholds

Over here, Mastercard monitors merchants for excessive fraud. And if a merchant breaches the established threshold, they will have to face some fees and punishments to mitigate the shortcoming.

A merchant enters the Mastercard Excessive Fraud program’s first stage when they have at least $3,000 in reported fraud cases. That means a fraud-to-sales ratio between 3% and 4.99%. For the second stage, the merchant will have to get at least $4,000 in reported fraud cases and a fraud-to-sales ratio ranging from 5% to 7.99%.

In the extreme and most damaging stage, the merchant is categorized as an Excessive Fraud Merchant when they get less than $5,000 in reported fraud issues and a fraud-to-sales ratio of more than 8%. When a merchant enters the Fraud Monitoring Program, they will have to pay determined fines ranging from $500 to $20,000, depending on their stage and duration in the period.

That said, let’s take a look at the ECP and how to avoid it.

Understanding the Mastercard Excessive Chargeback Program threshold

There are two branches of the Mastercard excessive chargeback program. A merchant could be flagged for breaching the threshold of one of the following programs:

  1. Chargeback Monitored Merchant (CMM)
  2. Excessive Chargeback Merchant (ECM)

Before we review the stated branches of the ECP, it’s important to highlight that these thresholds will apply to you depending on your acquiring bank’s geographical location. You will need to find out where your acquirer is to know the limitations that apply to you. That said, below are the content of each of the ECP and how to avoid them. 

Chargeback Monitored Merchant (CMM)

This aspect of MasterCard’s Excessive Chargeback Program is designed to track a merchant’s chargeback activity and quickly determine if the merchant is nearing the monthly chargeback threshold.

Mastercard places a merchant in the CMM program when the merchant reaches a 1.0% chargeback-to-sales ratio or if a merchant exceeds a 100-basis point chargeback threshold at the end of the monthly review.

Although Mastercard does not place any fee assessments on merchants in the CMM program, they will keep the merchants there until such merchants can lower their chargebacks ratio. Failure to achieve this remediation will lead to the vendor entering the next stage of the ECP.

Excessive Chargeback Merchant (ECM)

The Excessive Chargeback Merchant program monitors merchants that receive an excessive number of chargebacks monthly. If you’ve reached this point, your business is in huge trouble. Merchants go into ECM when they exceed the thresholds of a 1.5% chargeback ratio or 150 basis points for two consecutive months (also known as trigger months). Mastercard will place the merchant in the ECM until they can make remediation by lowering their basis point to below 150 for two consecutive months.

More so, Mastercard can place fines on merchants in the ECM program. They assess these fines as they choose. For instance, if your merchant account has $1,000 in actual Mastercard chargebacks in your ECM identification, the ECM fees will not be above the same amount, $1,000.

The ECM category of the Mastercard Excessive Chargeback Program lasts for the first six months of your entering the program. They expect the merchant to figure out the process and make necessary remediation at this stage. But if the merchant is still unable to amend their operation by the end of the sixth month, they will proceed to the second tract as an Excessive Chargeback Merchant. This period will last for another six months. At this stage, the Excessive Chargeback Merchant will have to provide a mitigation plan to show Mastercard they are taking critical steps to mitigate subsequent chargebacks. This remediation plan will determine whether the merchant will get a lifeline or not.

If the Excessive Chargeback Merchant can satisfy Mastercard’s demands, they will exit the ECP and begin a clean slate. Any subsequent flaggings would make them start the process all over again. 

How to avoid Mastercard Excessive Chargeback Program

The Mastercard Excessive Chargeback Program is no fun game at all. If a merchant cannot mitigate their chargeback issues as required by the programs above, the acquirer can terminate their merchant account. Hence, you must continuously monitor your chargeback ratio to avoid getting into the Mastercard Excessive Chargeback Program. Stay clear of suspicious transactions, keep a pulse on chargeback trends in the industry, and do your best to work things out with your client when an issue arises.

But as you already know, these cautions can still fall short of saving your business from ECP. If you want to join smart e-commerce merchants who are taking proactive measures to mitigate chargebacks and card frauds, a company like Chargeflow.io has your back.

Chargeflow.io is a technology tool that uses artificial intelligence and machine learning to recognize when a dispute on a payment occurs and fight those PayPal disputes and chargebacks as you’d wish. That can mean sifting through 450,000 disputes per minute. Instead of relying on your power of logic and writing skills when fighting a PayPal dispute, Chargeflow.io’s Dispute Automation software pulls from over 50 data points associated with the disputed order to strengthen your dispute.


Editors note: This post is contributed by Tom Chris at Chargeflow

Tags: Mastercard excessive chargeback program
ShareTweetShareSend
Previous Post

New Podcast Episode: How to Fight and Win Chargeback Disputes (Pt. 2)

Next Post

PAAY and OpenPath Offer Universal EMV 3DS Plugin to Prevent Ecommerce Fraud

Next Post
5 Types of Ecommerce Fraud

PAAY and OpenPath Offer Universal EMV 3DS Plugin to Prevent Ecommerce Fraud

Our Latest Reports

2022 Chargeback Consumer Survey Report

Fraud Prevention Tactics that Enable Exceptional Customer Experience

Addressing Payment Fraud and The Customer Experience in 2022

2022 Fraud Trends Report

ATO Fraud In Retail Report

2022 Customer Experience Report

3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue

Digital Trust And Safety Report: Combating the Evolving Complexities of Payment Fraud

On-Demand Webinars

Balancing Customer Experience and Fraud Prevention: What’s the Secret?

Stopping Fraud Across the Customer Lifecycle

Addressing Payment Fraud and the Customer Experience in 2022

 

Get the 2023 Fraud Trends Report

Search Our Site

No Result
View All Result

Our Sponsors

Featured Directory Listings

  • logo
    NoFraud
  • SEON. Fraud Fighters
  • sift logo
    Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Our Sponsors

Fraud Industry News

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023

Connect With Us

Quick Navigation

  • Home
  • News
  • Join Us
  • About Us
  • Contact Us
  • Advertise
  • Contribute
  • Privacy Policy

The Payments Media Network

Merchant Fraud Journal
Payments Review

Privacy Policy

Our Privacy Policy
Our Terms of Use

Resources

  • Articles
  • eCommerce Fraud Reports
  • eCommerce Fraud Webinars
  • Training and Certifications
  • Jobs Board
  • Associations and Non-Profits
  • Podcasts
  • Vendor Directory

Popular Posts

  • How to File a Claim With FedEx + What To Do If Claim is Denied

    How to File a Claim With FedEx + What To Do If Claim is Denied

    0 shares
    Share 0 Tweet 0
  • How Does Two-Factor Authentication (2FA) Work?

    0 shares
    Share 0 Tweet 0
  • Top eCommerce Fraud Prevention Companies

    0 shares
    Share 0 Tweet 0
  • The Best Reverse Email Lookup Tools in 2022 (with pricing)

    0 shares
    Share 0 Tweet 0

Featured Vendors

  • NoFraud
  • SEON. Fraud Fighters
  • Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Download the 2023 Fraud Trends Report

No Result
View All Result
  • About Merchant Fraud Journal
    • Interested in Contributing or Guest Posting to Merchant Fraud Journal?
  • Advertise on Merchant Fraud Journal
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Contact Us
  • Download Addressing Payment Fraud and Customer Experience Report
  • Download Chargebacks Consumer Survey Report 2022
  • Download Evolving Complexities of Payment Fraud Report
  • Download Fraud Prevention Tactics that Enable Exceptional Customer Experiences Report
  • Download Merchant Fraud Journal 2023 Fraud Trends Report
  • Download the 2020 Chargeback and Representment Report
  • Download the 2020 Merchant Fraud Journal Vendor Guide
  • Download the 2021 Fraud Trends Report
  • Download the 2022 Fraud Trends Report
  • Download the 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue Report
  • Download the MFJ 2022 Customer Experience Report
  • Download the MFJ ATO in Retail Report
  • Home
  • Job Dashboard
  • Join The Merchant Fraud Journal Community
  • Merchant Fraud Journal Advertising Agreement
  • MFJ Fraud Trends Report Giveaway
  • News
  • Post a Job
  • Privacy Policy
  • Resources
    • 2020 Chargeback Representment Guide for Merchants
    • 2020 Vendor Guide
    • 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue
    • Addressing Payment Fraud and the Customer Experience in 2022
    • Associations and Non-Profits
    • ATO Fraud In Retail Report
    • Balancing Customer Experience and Fraud Prevention: What’s the Secret?
    • Chargebacks Consumer Survey Report 2022
    • Digital Trust & Safety: Combating the Evolving Complexities of Payment Fraud
    • eCommerce Fraud Reports
    • eCommerce Fraud Webinars
    • Fraud Prevention Tactics that Enable Exceptional Customer Experiences
    • Fraud Prevention Training and Certifications
    • How to Build a Recession Proof Chargeback Prevention Strategy
    • How to Stop Fraud During the 2022 Holiday Season
    • Jobs Board
    • Merchant Fraud Journal 2023 Fraud Trends Report
    • Merchant Fraud Journal’s Fraud Trends 2020 Report
    • Merchant Fraud Journal’s Fraud Trends 2021 Report
    • Merchant Fraud Journal’s Fraud Trends 2022 Report
    • MFJ’s 2022 Customer Experience Report
    • Podcasts
    • Prevent High-Velocity Fraud Attacks During the 2021 Holiday Season
    • Stopping Fraud Across the Customer Lifecycle
    • Vendor Directory
    • Webinar – Addressing Payment Fraud and the Customer Experience in 2022
    • Webinar – Mitigating Fraud and Risk on the ACH Network
    • Win January Chargeback Disputes
  • Subscribed
  • Terms and Conditions

© 2021 Payments Media Solutions Canada Inc.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?