Mastercard Monitoring Programs: What Merchants Get Measured On

You’re here because your business needs to understand Mastercard’s compliance expectations—whether you’re already receiving warnings or want to proactively avoid monitoring programs. We’ll show you exactly what Mastercard tracks, why they track it, and most importantly, how to stay compliant.   Mastercard monitoring programs are comprehensive compliance frameworks that track merchant performance across multiple risk dimensions, including chargebacks, fraud rates, and adherence to brand standards. These programs operate through automated systems that monitor all transactions in real-time, automatically flagging merchants who exceed defined thresholds and potentially subjecting them to fines ranging from $500 to $200,000 per month. TL;DR Summary:

• Why Mastercard Monitors: Mastercard prevented over $40 billion in fraud last year through monitoring programs designed to protect the payment ecosystem from excessive chargebacks (80% fraud-related) and transaction laundering.
• Main Programs: The Excessive Chargeback Program (ECP) monitors merchants with 100+ chargebacks and 1.5% ratio, while the Excessive Fraud Merchant (EFM) program tracks e-commerce fraud with thresholds of 1,000+ transactions and 50+ basis points.
• Key Metrics Tracked: Chargeback-to-transaction ratios (calculated using previous month’s sales), fraud chargeback rates for specific reason codes (4837, 4863), and 3DS authentication utilization rates.
• Penalties and Consequences: Monthly fines escalate from $1,000 to $200,000 based on violation duration, with additional issuer recovery assessments of $5 per chargeback over 300 for high-risk merchants.
• Exit Requirements: Merchants must maintain three consecutive months below program thresholds to exit monitoring status—months in violation don’t reset until compliance is achieved.
• Prevention Strategies: Clear billing descriptors (confusion causes one-third of chargebacks), 3DS authentication implementation, and automated dispute management tools that achieve 33% chargeback reduction.

Quick Universal Tip: Monitor your chargeback ratio weekly using Mastercard’s calculation method (current month chargebacks ÷ previous month sales × 100). Maintaining visibility on this single metric can prevent 90% of monitoring program entries, as most merchants don’t realize they’re approaching thresholds until it’s too late.

Why does Mastercard monitor merchant activity through these programs?

Mastercard monitors merchant activity through these programs to prevent fraud losses and protect payment ecosystem integrity. In 2024, Mastercard helped prevent over $40 billion in fraud through monitoring initiatives, addressing the reality that 80% of chargebacks stem from criminal and friendly fraud. Consumer disputes reached $11 billion with U.S. card issuers last year, up from $7.2 billion in 2019. The following sections explore the specific goals driving Mastercard’s monitoring efforts and how these programs maintain payment system security.

What goals and risks drive Mastercard’s monitoring efforts?

The goals and risks driving Mastercard’s monitoring efforts center on combating exponential fraud growth threatening the global payments infrastructure. Global ecommerce fraud losses reached $41 million in 2022 and are predicted to exceed $48 billion in 2023. Card-not-present attacks cost merchants approximately $130 billion by the end of 2023. North America accounts for over 42% of global ecommerce fraud by value in 2023, creating regional urgency for enhanced monitoring.   Mastercard targets transaction laundering and merchant compliance violations that undermine network trust. The company tracks both criminal fraud patterns and friendly fraud behaviors across millions of transactions daily. Risk concentration in specific merchant categories and geographic regions shapes monitoring priorities and threshold settings.   Prevention economics justify intensive monitoring investments. Each prevented fraudulent transaction saves multiple stakeholders from losses exceeding the original transaction value through avoided chargebacks, operational costs, and reputational damage.

How do Mastercard’s monitoring programs support payment ecosystem integrity?

Mastercard’s monitoring programs support payment ecosystem integrity through automated detection systems and mandatory compliance frameworks. Programs reduce transaction laundering while protecting legitimate merchants from fraudulent actors. New MMP requirements effective January 1, 2026, mandate initial scans before first transaction processing and persistent monitoring thereafter.   The monitoring approach evolved from outlier management to lifecycle risk management for comprehensive fraud prevention. Programs establish globally aligned fraud thresholds for domestic and cross-border card-not-present transactions. Mastercard network data tracks all transactions and chargebacks, automatically notifying acquirers of compliance breaches within detection timeframes.   System-wide integrity depends on consistent enforcement across all participants. Monitoring creates accountability chains from merchants through acquirers to the network level. Real-time data sharing enables rapid response to emerging threats before they cascade through the ecosystem. These programs ensure every transaction meets minimum security standards while maintaining processing efficiency for compliant merchants.

What are the main types of Mastercard Monitoring Programs for merchants?

The main types of Mastercard Monitoring Programs for merchants are the Excessive Chargeback Program (ECP), High-Risk Merchant Monitoring Program (HRMP), and Brand Performance programs including the Excessive Fraud Merchant (EFM) program. Each program monitors different risk indicators at the Merchant ID level with specific thresholds and escalating penalties. These programs work together to protect payment ecosystem integrity through comprehensive transaction monitoring.

How does the Mastercard Excessive Chargeback Program (ECP) work?

The Mastercard Excessive Chargeback Program works through a two-tiered monitoring system that tracks chargeback performance monthly at the Merchant ID level. The program calculates the Chargeback-to-Transaction Ratio (CTR) by dividing chargebacks in the current month by sales transactions in the preceding month.   The first tier, Excessive Chargeback Merchant (ECM), triggers when merchants reach both:

• Minimum 100 chargebacks
• 1.50% chargeback-to-transaction ratio

The second tier, High Excessive Chargeback Merchant (HECM), activates at:

• Minimum 300 chargebacks
• 3.00% chargeback-to-transaction ratio

Fines begin in the second consecutive violation month. ECM penalties range from $1,000 in months 2-3 to $100,000 after month 19. HECM fines escalate faster, starting at $1,000 in month 2 and reaching $200,000 after month 19. HECM merchants face an additional issuer recovery assessment of $5 per chargeback over 300 after four months in the program.

What is the Mastercard High-Risk Merchant Monitoring Program (HRMP)?

The Mastercard High-Risk Merchant Monitoring Program targets merchants operating in high-risk categories requiring enhanced oversight. HRMP focuses on businesses with elevated fraud potential, restricted content, or transaction laundering risks. The program mandates initial scanning before first transaction processing and persistent monitoring thereafter, with 15-day resolution timelines for identified issues.

How do Brand Performance programs differ from compliance monitoring initiatives?

Brand Performance programs differ from compliance monitoring by focusing specifically on fraud-related metrics rather than general chargeback volumes. The Excessive Fraud Merchant (EFM) program monitors card-not-present e-commerce transactions exclusively for fraud-related chargebacks.   EFM activation requires meeting all three thresholds:

• 1,000+ e-commerce transactions
• $50,000+ fraud chargeback amount
• 50+ basis points fraud ratio

The program also monitors 3DS utilization, triggering when usage falls below 10% in US/Canada or 50% in Europe. EFM fines range from $500 to $100,000 based on violation duration.   The Merchant Monitoring Program (MMP) includes BRAM restricted content monitoring and transaction laundering detection. MMP requires documentation showing initial scans and persistent monitoring evidence. These programs protect brand integrity while compliance monitoring ensures operational standards across the payment network.

Which merchant activities and metrics are reviewed in Mastercard Monitoring Programs?

Mastercard Monitoring Programs review specific merchant activities and metrics to maintain payment ecosystem integrity. These programs assess chargeback ratios, fraud patterns, and transaction behaviors that indicate risk. Understanding these metrics helps merchants maintain compliance and avoid program placement.

What role do chargeback ratios play in merchant assessments?

Chargeback ratios play the central role in merchant assessments by determining program placement and compliance status. Mastercard calculates chargeback basis points by dividing first presentment chargebacks by prior month sales, then multiplying by 10,000. For example, 100 chargebacks divided by 10,000 sales transactions × 10,000 equals 100 chargeback basis points.   The calculation timing differs between card networks. Mastercard calculates ratios using previous month’s transactions, while Visa uses same month data. Processing banks typically set a maximum chargeback ratio of 1%.   Current market data shows concerning trends. The average chargeback rate for card-not-present eCommerce transactions ranges between 0.6% and 1%. A 2024 analysis revealed eCommerce chargeback rates rose 222% between Q1 2023 and Q1 2024.   These ratios determine merchant risk levels and trigger monitoring program placement when thresholds are exceeded.

How does fraud monitoring factor into Mastercard evaluations?

Fraud monitoring factors into Mastercard evaluations through the Excessive Fraud Merchant (EFM) program, which tracks specific fraud indicators. EFM monitors fraud chargebacks with reason codes 4837 (No Cardholder Authorization) and 4863 (Cardholder Does Not Recognize).   The fraud chargeback ratio calculation follows this formula: e-commerce fraud chargebacks in current month divided by e-commerce sales in prior month × 10,000.   Recent fraud trends show escalating challenges:

• 72% of merchants reported increased friendly fraud chargebacks in 2024
• Nearly half of merchants estimate friendly fraud represents 50% or more of their chargebacks
• 57% of merchants identified BOPIS/BORIS fraud as a major concern in 2024
• Enumeration attacks cause $1.1 billion annually in fraud losses

These metrics determine whether merchants enter fraud monitoring programs and face associated penalties.

What transaction patterns or behaviors trigger increased scrutiny?

Transaction patterns that trigger increased scrutiny include content violations, documentation gaps, and authentication bypasses. MMP requires monitoring of gated and member-exclusive content areas on merchant websites. Documentation must show initial scan and evidence of persistent monitoring with 15-day resolution timelines.   Specific monitored behaviors include:

• Marketplace monitoring and MCC accuracy with change history requirements
• Data-only transactions leveraging 3DS protocol without full authentication cycles
• International transactions, particularly from Asia-Pacific regions

International transactions face heightened scrutiny. Asia-Pacific ranks first in fraudulent international web orders, prompting stricter monitoring for cross-border transactions.   These transaction patterns help Mastercard identify potential compliance violations before they escalate into systematic problems requiring program intervention.

What are the possible consequences for merchants identified by Mastercard monitoring?

The consequences for merchants identified by Mastercard monitoring programs are severe financial penalties, processing restrictions, and reputational damage that compound over time. These programs impose escalating fines starting from the second month of violation, with merchants facing increasingly harsh penalties the longer they remain non-compliant.

What fees or penalties might merchants face under these programs?

The fees or penalties merchants face under these programs follow an escalating structure based on program tier and duration. Excessive Chargeback Merchant (ECM) fines start at $1,000 for months 2-3, increase to $5,000 for months 4-6, jump to $25,000 for months 7-11, reach $50,000 for months 12-18, and cap at $100,000 for month 19 onward.   High Excessive Chargeback Merchant (HECM) penalties are more severe. Merchants pay $1,000 in month 2, $2,000 in month 3, $10,000 for months 4-6, $50,000 for months 7-11, $100,000 for months 12-18, and $200,000 for month 19 and beyond. HECM merchants in the program for 4+ months face an additional Issuer Recovery Assessment of $5 per chargeback over 300.   Excessive Fraud Merchant (EFM) fines begin at $500 in month 2, rise to $1,000 in month 3, increase to $5,000 for months 4-6, escalate to $25,000 for months 7-11, reach $50,000 for months 12-18, and cap at $100,000 for month 19+. The average cost per chargeback dispute adds $190 to merchant expenses. When a MID violates both EFM and ECM simultaneously, Mastercard assesses only the EFM violation until program exit.

Can merchants lose their ability to process Mastercard payments?

Merchants can lose their ability to process Mastercard payments through several enforcement mechanisms. Acquirers who cannot control high-risk merchants risk losing acquiring privileges altogether. Non-compliant merchants face frozen funds and terminated accounts when violations persist.   Placement on Mastercard’s MATCH list effectively blacklists merchants from most payment processors industry-wide. This designation creates a permanent barrier to obtaining new processing relationships. Acquirers processing for noncompliant MIDs receive financial assessments that compound monthly, creating pressure to terminate merchant relationships.   Extended noncompliance triggers acquirer-level fines in addition to merchant penalties. These dual-level penalties incentivize acquirers to proactively terminate high-risk merchant accounts before violations impact their entire portfolio. The combination of frozen funds, account termination, and MATCH list placement can permanently end a merchant’s ability to accept card payments.

How does a monitoring program designation impact merchant reputation?

A monitoring program designation impacts merchant reputation through operational constraints and industry-wide visibility. According to industry data, one-third of participants report chargeback costs directly impact the end price of goods and services provided, forcing merchants to raise prices and lose competitive advantage.   Noncompliance exposes payments companies to brand risk, regulatory action, and reputational harm that extends beyond immediate financial penalties. A single merchant’s excessive ratios can drag an entire acquirer portfolio into non-compliance, damaging relationships across the payment ecosystem.   Merchants on the MATCH list face industry-wide processing restrictions that become public knowledge among financial institutions. Nearly three-quarters of participants consider disputing a charge a valid alternative to refunds, increasing merchant risk exposure. This consumer behavior pattern compounds reputational damage as monitoring program placement signals operational failures to partners, investors, and competitors, creating long-term business consequences beyond immediate financial penalties.

How can merchants proactively avoid or address Mastercard Monitoring Program issues?

Merchants can proactively avoid or address Mastercard Monitoring Program issues through operational excellence, automated dispute management, and swift response protocols. Clear billing descriptors, robust authentication, and real-time fraud monitoring form the foundation of compliance. The following strategies help merchants maintain ratios below critical thresholds and navigate program requirements effectively.

What operational best practices can help prevent excessive chargebacks or fraud?

Operational best practices that help prevent excessive chargebacks or fraud include clear billing descriptors, strong authentication controls, and complete, accurate merchant data. A 2024 Cardholder Dispute Index study identified confusing billing descriptors as the leading cause of chargebacks. One-third of merchants don’t know exactly how their descriptor appears on customer statements.   Merchants should implement 3DS authentication across all transactions. Less than 10% utilization in US and Canada triggers EFM monitoring automatically. This authentication layer reduces fraud-related chargebacks significantly.   Complete merchant data requirements include:

• Legal business names
• DBAs (Doing Business As) registrations
• Active website URLs
• MMSP (Merchant Monitoring Service Provider) data

Member-exclusive and password-protected website areas require continuous monitoring for compliance. These gated sections often escape standard oversight but remain subject to Mastercard scrutiny.

How can dispute management and fraud prevention tools mitigate monitoring risks?

Dispute management and fraud prevention tools mitigate monitoring risks by reducing chargeback volume, improving recovery rates, and identifying fraud patterns before thresholds are exceeded. A 2024 merchant survey found that 77% of merchants used card networks’ compelling evidence rules to reverse first-party misuse disputes successfully.   Merchants win an average of 45% of chargebacks with an 18% net recovery rate. Companies using representment software saw 55% higher net recovery than those managing disputes internally.   AI-powered fraud prevention adoption shows strong momentum:

• Two-thirds of merchants already use or plan to implement AI fraud tools
• 70% of companies use three or more tools to balance fraud prevention with customer experience

These multi-layered approaches create robust defense against both criminal fraud and friendly fraud disputes.

When and how should merchants respond if they’re placed in a Mastercard monitoring program?

Merchants should respond immediately when placed in a Mastercard monitoring program by implementing corrective actions and maintaining three consecutive months below program thresholds to exit. The month counter doesn’t reset until three consecutive compliant months are achieved. After an audit closes, if identified again, assessments reset to month one.   Prompt action is required because ECP fines compound monthly, punishing inertia. Findings must be investigated and resolved within mandated 15-day timelines.   Response priorities include:

• Implementing immediate fraud controls
• Reviewing billing descriptor clarity
• Upgrading authentication protocols
• Establishing real-time monitoring systems

Maintaining ratios below 1% and responding to fraud data in real-time provides negotiating power for better rates with acquirers. This proactive stance demonstrates commitment to compliance and reduces long-term program risks.

How should you approach Mastercard Monitoring Program compliance with support from 2Accept?

Mastercard Monitoring Program compliance requires proactive management of chargeback ratios, fraud prevention systems, and operational controls. Merchants face escalating fines from $1,000 to $200,000 for violations, with potential account termination and MATCH listing for persistent non-compliance. The following strategies help merchants maintain compliance while 2Accept provides specialized monitoring support.

Can 2Accept help merchants manage or avoid Mastercard Monitoring Program issues?

2Accept helps merchants manage or avoid Mastercard Monitoring Program issues through automated chargeback tracking, real-time fraud detection, and compliance reporting. The platform monitors chargeback-to-transaction ratios against Mastercard’s 1.5% ECM and 3.0% HECM thresholds. 2Accept’s dispute management system achieves a 33% reduction in chargeback cases through automated responses and compelling evidence submission.   The monitoring dashboard tracks fraud chargeback basis points for EFM compliance, alerting merchants before reaching the 50 basis point threshold. 2Accept implements 3DS authentication protocols to maintain above 10% utilization in US/Canada markets, preventing EFM program entry. The system provides clear billing descriptor optimization, addressing the leading cause of chargebacks identified in the 2024 Cardholder Dispute Index.   2Accept’s compliance tools include mandatory initial website scans and persistent 15-day resolution monitoring required by January 2026 MMP standards. The platform maintains merchant data accuracy with legal names, DBAs, URLs, and MMSP information. Real-time alerts notify merchants of approaching thresholds, enabling corrective action before program entry and avoiding fines ranging from $500 to $100,000 based on violation duration.

What are the key takeaways about Mastercard Monitoring Programs and merchant measurement?

The key takeaways about Mastercard Monitoring Programs and merchant measurement are that fraud losses will cost US merchants $4.61 per dollar in 2025, representing a 37% increase from 2020. Chargeback fraud will generate $28.1 billion in annual losses by 2026, a 40% rise from 2023 levels. Mastercard’s chargeback thresholds of 1.5% and 3.0% provide more flexibility than Visa’s 0.9% starting point.   Industry-specific chargeback rates demonstrate significant variation across sectors. Education merchants average 1.02%, while restaurants maintain 0.12% rates. Travel (0.89%) and gaming (0.83%) sectors fall between these extremes. These variations inform risk assessment and pricing strategies for payment processors.   Consumer behavior patterns reveal critical compliance challenges for merchants. There are many misconceptions about chargebacks, such as 84% of customers preferring chargebacks to refunds and 72% not understanding the difference between them. The average cardholder filed 5.7 chargebacks valued at $76 in 2023, creating systematic risk for merchants regardless of actual fraud rates.   Mastercard Monitoring Programs protect the payment ecosystem while imposing strict accountability on merchants through automated tracking, escalating penalties, and industry-wide consequences for non-compliance.