Free trial and subscription rules for Visa and Mastercard are ever changing, which is why new rules have taken effect in 2020.
If you’ve been running free trial products and subscriptions within your business model or are thinking about it, it’s important that you take VISA and Mastercard rules very seriously. In fact, the rules may dramatically impact how you conduct your day-to-day business.
For example, if you’ve been running free trials and/or subscriptions prior to this year, it’s important for you to know that as of April 18, 2029 all merchants who accept VISA and who offer free trial rules (or offer upsells) and/or are engaged in negative option billing (or the practice of giving customers service not previously provided, then charging unless the customer declines the service). The new rule is quite similar to a similar rule implemented by Mastercard that was implemented in 2019.
But we’re getting ahead of ourselves. The purpose of this post is to dive into the rule differences between VISA and Mastercard.
The following will explain the differences.
At the time of enrollment, merchants are required to ask the customer to expressly consent to entering into the free trial and ongoing subscription service for recurring payments.
When a customer enrolls, a merchant must provide a copy (via email, SMS/text, or other delivery method) if the customer agrees to the terms and conditions of the free trial and subscription service.
The notification must include the following:
Explicit Transaction Receipts
Merchants must disclose the following on transaction receipts:
An additional descriptor is required for letting the card holder know that he/she will have a trial period-related transaction. This descriptor is required in the Merchant Name field of the Clearing Record for the first transaction at the end of a trial period. For example, the descriptor could read “trial,” free trial,” or “trial period” and will appear on the cardholder’s statements, mobile apps, online banking, and SMS/text alerts.
Expanded Dispute Rights
The existing dispute condition of “Misrepresentation” has been expanded, specifically where merchandise or digital goods have been purchased (1) through a trial period or (2) as a one-off purchase and the cardholder was not made aware of the fact that they would be charged again in the future.
If a consumer wrongly tries to dispute the charge, a merchant must provide proof that they have correctly charged them. Proof must come in the form of: (a) showing that the cardholder expressly agreed to future transactions at the time of their first interaction with the brand in question, and (b) The merchant was electronically notified before processing new transactions after a trial/promotional period has ended.
In 2019, Mastercard decided that it was time to make sure that consumers were protected against shady free trial and subscription practices. This comes after millions of consumers reported being wrongly treated by numerous brands.
The new rules require the following:
As you can see, VISA and Mastercard have similar rules, but there are some differences. It’s vital that you review them both and make sure that you are fully adhering to their policies.
Also, keep in mind that these rules can quickly evolve. We strongly recommend that you regularly review both of their policies on a regular basis. The more informed you can stay, the more likely you will succeed during these uncertain times.
18100 Von Karman Avenue, Ste. 870
Irvine, California, 92612, United States,
CB360 phone number: +1-888-633-2073
©2020 Chargeback360. All rights reserved