Mastercard ECM Program: Fee StructureThe Longer You’re in It, the Worse It Gets
The ECM Fee Structure is Deliberately Punitive
Think of Mastercard’s Excessive Chargeback Merchant program as the world’s worst subscription.
The program is nominally intended to help you get your chargebacks under control. But, you never willingly signed up for the service. And, it comes with a price tag that increases with each passing month.
As punitive as it is, this fee structure is intentional: the ECM program’s escalating financial consequences are meant to force your hand and incentivize you to take chargeback prevention seriously. So, in this chapter, let’s explore how the ECM program’s penalties for non-compliance work, and how they compound over time.
Penalties For ECM Noncompliance
Let’s say you’re placed in the chargeback monitoring program. If this happens, Mastercard will immediately notify your acquirer, who will then inform you. In most cases, you’ll be required to submit a remediation plan that explains the excessive chargebacks, and lays out how you intend to resolve the situation.
There are no fees for the first month of participation in the program. If you can keep your chargeback rate under the acceptable program threshold for three consecutive months, you’ll be removed from the program. Otherwise, Mastercard will begin assessing non-performance fees.
Non-performance assessment fees start at $1,000 in the second month of the program. However, they can climb as high as $100,000 per month if the non-compliance lasts more than 18 months. Additional penalties, such as issuer recovery charges, may also be applied.
As one might expect, the HECM designation carries stiffer penalties than the standard ECM label:
| Number of Months Above ECP Thresholds | Assessment if ECM in Violation Month (100-299 Chargebacks and 150-299 Basis Points) | Assessment if High Excessive (HECM) in Violation Month Chargebacks and Greater than 300 Basis Points) | |
| Violation Assessment | Violation Assessment | Issuer Recovery Assessment | |
| 1 | 0 | 0 | No |
| 2 | EUR/USD 1,000 | EUR/USD 1,000 | No |
| 3 | EUR/USD 1,000 | EUR/USD 2,000 | No |
| 4 to 6 | EUR/USD 5,000 | EUR/USD 10,000 | Yes |
| 7 to 11 | EUR/USD 25,000 | EUR/USD 50,000 | Yes |
| 12 to 18 | EUR/USD 50,000 | EUR/USD 100,000 | Yes |
| 19 + | EUR/USD 100,000 | EUR/USD 200,000 | Yes |
The penalties for extended periods of noncompliance can be costly. We’ll talk more about the mid- to long-term consequences in a later chapter. For now, just remember that the longer you’re subject to the program, the more you’ll pay. That’s assuming that your processor doesn’t simply terminate your account for posing a risk to them as a non-compliant merchant.
