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Mastercard SPME §7.2 · Jun 2022 → May 2023

Ongoing Monitoring

substantive

The term 'Submerchant' has been replaced with 'Sponsored Merchant' to clarify the entities monitored, and the detailed requirements around monitoring e-commerce merchant websites and the best practice recommendation have been removed, streamlining the ongoing monitoring obligations.

Sources Mastercard SPME · Jun 2022 · page 66 PDF Mastercard SPME · May 2023 · page 77 PDF Fraud Monitoring current
Also in §7.x this release substantive §7 Availability control substantive §7.1 Screening New Merchants, Sponsored Merchants, and ATM Owners substantive §7.1.1 Required Screening Procedures substantive §7.1.3 Assessments for Noncompliance with Screening Procedures substantive §7.3 Merchant Education
Why these edits? The change from 'Submerchant' to 'Sponsored Merchant' clarifies which entities must be monitored for transaction activity in an effort to deter fraud, affecting obligations related to ongoing fraud monitoring under section 3.7.
Mastercard SPME §7.2
This section was substantively restructured between versions (37% text overlap). Compare the texts directly below.
Before · Jun 2022 · page 66

An Acquirer must monitor and confirm regularly that the Transaction activity of each of its Merchants (sales, credits, and chargebacks) is conducted in a legal and ethical manner and in full compliance with the Standards, and ensure that a Payment Facilitator conducts such monitoring with respect to each of its Submerchants, in an effort to deter fraud. Monitoring must focus on changes in activity over time, activity inconsistent with the Merchant’s or Submerchant’s business, or exceptional activity relating to the number of Transactions and Transaction amounts outside the normal fluctuation related to seasonal sales. Specifically for Mastercard POS Transaction processing, ongoing monitoring includes, but is not limited to, the Acquirer fraud loss controls relating to deposit (including credits) and authorization activity described in section 6.2.2. With respect to an electronic commerce (e-commerce) Merchant, the Acquirer regularly, as reasonably appropriate in light of all circumstances, must review and monitor the Merchant’s website(s) and business activities to confirm and to reconfirm regularly that any activity related to or using a Mark is conducted in a legal and ethical manner and in full compliance with the Standards. The Acquirer must ensure that a Payment Facilitator conducts such monitoring with respect to each of its Submerchant’s website(s). As a best practice, Mastercard recommends that Acquirers use a Merchant monitoring solution to review their e-commerce Merchants’ and Submerchants’ activity to avoid processing illegal or brand-damaging Transactions. Merchant, Submerchant, and ATM Owner Screening and Monitoring Standards

After · May 2023 · page 77

An Acquirer must monitor and confirm regularly that the Transaction activity of each of its Merchants (sales, credits, and chargebacks) is conducted in a legal and ethical manner and in full compliance with the Standards, and ensure that a Payment Facilitator conducts such monitoring with respect to each of its Sponsored Merchants, in an effort to deter fraud. Monitoring must focus on changes in activity over time, activity inconsistent with the Merchant’s or Sponsored Merchant’s business, or exceptional activity relating to the number of Transactions and Transaction amounts outside the normal fluctuation related to seasonal sales. Specifically for Mastercard POS Transaction processing, ongoing Merchant, Submerchant, and ATM Owner Screening and Monitoring Standards

Halyard Pay · 2 files
program: Fraud Monitoring


- authority: Mastercard SPME §3.7


+ authority: Mastercard SPME 7.2, 3.7


fraud_to_sales_ratio_threshold: 0.015


min_count_per_month: 100


monitoring_cadence: monthly


escalation_actions:


  - escalate_to_human_review


  - notify_acquirer


lookback_period_months: 1


remediation_review_interval_days: 30


agent_owner: fraud_ops_agent


+ 


+ # Updated to reflect the terminology change from 'Submerchant' to 'Sponsored Merchant' in monitoring obligations as per Mastercard SPME 77.2.


+ # This ensures monitoring focuses appropriately on transaction activity across Merchants and their Sponsored Merchants to detect fraud, consistent with section 3.7 requirements.

Fraud Monitoring

Halyard Pay monitors merchant fraud activity on a monthly basis to detect patterns that

exceed Mastercard's acceptable fraud-to-sales thresholds. A merchant whose rolling

monthly fraud-to-sales ratio meets or exceeds 1.5% (0.015) and whose fraud count

reaches at least 100 transactions in that same month triggers mandatory escalation

under this policy.

When this policy applies

This policy applies to all merchants processed through Halyard Pay's acquiring platform

where Mastercard is the applicable card network. It governs both card-present and

card-not-present transaction streams. streams and applies equally to transactions by both Merchants and Sponsored Merchants as defined by Mastercard.

Required actions

  1. Compute the merchant's rolling fraud-to-sales ratio each calendar month.

  2. If the ratio meets or exceeds the threshold AND the minimum count is reached,

escalate the merchant account to human review immediately.

  1. Notify the acquiring compliance officer and document the case ID with supporting

transaction data.

  1. Track case progress until the account returns to threshold compliance or is

terminated.

Source authority: Mastercard SPME §3.7.3.7 and 7.2.

policies/fraud_monitoring/policy.md — after applying change

Fraud Monitoring

Halyard Pay monitors merchant fraud activity on a monthly basis to detect patterns that

exceed Mastercard's acceptable fraud-to-sales thresholds. A merchant whose rolling

monthly fraud-to-sales ratio meets or exceeds 1.5% (0.015) and whose fraud count

reaches at least 100 transactions in that same month triggers mandatory escalation

under this policy.

When this policy applies

This policy applies to all merchants processed through Halyard Pay's acquiring platform

where Mastercard is the applicable card network. It governs both card-present and

card-not-present transaction streams. streams and applies equally to transactions by both Merchants and Sponsored Merchants as defined by Mastercard.

Required actions

  1. Compute the merchant's rolling fraud-to-sales ratio each calendar month.

  2. If the ratio meets or exceeds the threshold AND the minimum count is reached,

escalate the merchant account to human review immediately.

  1. Notify the acquiring compliance officer and document the case ID with supporting

transaction data.

  1. Track case progress until the account returns to threshold compliance or is

terminated.

Source authority: Mastercard SPME §3.7.3.7 and 7.2.

Source authority: Mastercard SPME §7.2.

--- a/policies/fraud_monitoring/rules.yaml
+++ b/policies/fraud_monitoring/rules.yaml
@@ -1,5 +1,5 @@
 program: Fraud Monitoring
-authority: Mastercard SPME §3.7
+authority: Mastercard SPME 7.2, 3.7
 fraud_to_sales_ratio_threshold: 0.015
 min_count_per_month: 100
 monitoring_cadence: monthly
@@ -9,3 +9,6 @@
 lookback_period_months: 1
 remediation_review_interval_days: 30
 agent_owner: fraud_ops_agent
+
+# Updated to reflect the terminology change from 'Submerchant' to 'Sponsored Merchant' in monitoring obligations as per Mastercard SPME 77.2.
+# This ensures monitoring focuses appropriately on transaction activity across Merchants and their Sponsored Merchants to detect fraud, consistent with section 3.7 requirements.
--- a/policies/fraud_monitoring/policy.md
+++ b/policies/fraud_monitoring/policy.md
@@ -10,7 +10,7 @@
 
 This policy applies to all merchants processed through Halyard Pay's acquiring platform
 where Mastercard is the applicable card network. It governs both card-present and
-card-not-present transaction streams.
+card-not-present transaction streams and applies equally to transactions by both Merchants and Sponsored Merchants as defined by Mastercard.
 
 ## Required actions
 
@@ -22,4 +22,4 @@
 4. Track case progress until the account returns to threshold compliance or is
    terminated.
 
-Source authority: Mastercard SPME §3.7.
+Source authority: Mastercard SPME 3.7 and 7.2.