Mastercard excessive fraud merchant program
What is Mastercard excessive fraud merchant program?
Mastercard excessive fraud merchant program (EFM) is a Mastercard compliance program that places merchants with high fraud-related under monthly monitoring and escalating fines. It sits alongside the Excessive Chargeback Merchant (ECM) tier inside Mastercard's Acquirer .
EFM measures fraud specifically, not total dispute volume. A merchant can stay well clear of the chargeback ratio thresholds and still be identified for EFM if fraud chargebacks concentrate in one month while coverage stays low. Mastercard notifies the , which passes remediation requirements down to the merchant.
Key facts
- Also known as: EFM, Mastercard EFM program
- Qualifying disputes: only 4837 (No Cardholder Authorization) counts toward the thresholds
- Counter logic: the first 15 fraud chargebacks from the same card number (PAN) count; further chargebacks on that PAN don't
- Formula: fraud chargeback = fraud chargebacks in the current month ÷ Mastercard transactions in the previous month × 10,000
- Identified by: ID, reviewed monthly
- Exit: Mastercard can remove a merchant from monitoring after three consecutive months below the thresholds
Who it applies to
EFM applies to e-commerce merchants accepting Mastercard. Identification requires all four conditions to be met in the same calendar month:
- 1,000 or more e-commerce transactions
- fraud-related chargebacks totalling USD 50,000 or more (or local currency equivalent)
- 50 or more fraud chargeback basis points
- 3DS or (DSRP) coverage below 10% of monthly clearing volume in non-regulated countries, or below 50% in regulated countries
The fourth condition is the one merchants control most directly. A merchant with heavy fraud but authentication coverage above the program floor falls outside EFM regardless of its basis point count.
Key requirements
Once a merchant is identified, the acquiring bank receives the notification and the merchant enters a monthly review cycle. Remediation centres on bringing at least one qualifying condition back below its threshold, and raising 3DS or DSRP coverage is the fastest route because it removes a criterion outright rather than waiting for fraud volumes to decline.
Acquirers typically require a documented fraud reduction plan, monthly progress reporting, and payment of program review fees for the duration of monitoring. Because only reason code 4837 feeds the counters, disputes filed under service or processing reason codes have no effect on EFM status even though they still count toward the .
Penalties for non-compliance
Fines escalate with each consecutive month a merchant remains in the program:
| Months in EFM | Fine |
| 1 | 0 USD |
| 2 | 500 USD |
| 3 | 1,000 USD |
| 4-6 | 5,000 USD |
| 7-11 | 25,000 USD |
| 12-18 | 50,000 USD |
| 19+ | 100,000 USD |
Mastercard assesses the fine to the acquiring bank, which passes it to the merchant. Sustained EFM status also changes how the acquiring bank underwrites the account: , higher , and withdrawal of card acceptance are all standard acquirer responses to a merchant that stays in monitoring past the first few months.
