Free trials or introductory offers which roll into ongoing subscriptions or recurring charges can lead to problems for cardholders and endpoints including high call center volumes, customer complaints, write-offs, and card closures.
To address these concerns, Visa is updating its acceptance, disclosure, and cancellation policies effective April 18, 2020.
These changes are designed to promote an enhanced cardholder experience, enable issuers to clearly identify these transactions, and bring more specificity and clarity to the disputes requirements. Cardholders will be provided clearer information, enabling them to identify, recognize, and take action on subscription transactions, reducing the need for disputes.
These changes apply to merchants in any merchant category code (MCC) selling physical or digital goods or services if they offer free trials or introductory offers which roll into an ongoing subscription or recurring agreement.
- At the time of enrollment, merchants must require the cardholder to expressly consent to entering an ongoing subscription service for recurring payments.
- At the time of enrollment, merchants must provide a copy (i.e., email or SMS/text, or other delivery method, if agreed with the cardholder) of the terms and conditions of the subscription service to the cardholder, even if no amount was due at the time. This must include:
- Confirmation that the cardholder has agreed to a subscription, unless the cardholder cancels.
- The start date of the subscription.
- Details of the goods/services.
- Ongoing transaction amount and billing frequency/date.
- Link or other simple mechanism to enable the cardholder to easily cancel any subsequent transactions online.
- Merchants must also send a reminder notification (i.e., email or SMS/text) including a link to online cancellation policy at least seven (7) days before initiating a recurring transaction if:
- A trial period, introductory offer, or promotional period is about to expire.
- The nature of the recurring agreement has changed (for example, the price or billing period).
Explicit Transaction Receipts
- Merchants must disclose the following on transaction receipts:
- Length of any trial period, introductory offer, or promotional period, including clear disclosure that the cardholder will be charged unless the cardholder takes steps to cancel any subsequent transactions.
- Transaction amount and date for the initial transaction (even if no amount is due) and for subsequent recurring transactions.
- A link or other simple mechanism to enable the cardholder to easily cancel any subsequent transactions online.
- An additional descriptor indicating a trial period-related transaction will be required in the Merchant Name field of the Clearing Record for the first transaction at the end of a trial period.
- This descriptor (for example, “trial,” “trial period,” “free trial”) will then appear on cardholder statements, online banking, mobile apps, and SMS/text alerts, in the same way discretionary, additional invoice/order numbers appear for electronic commerce transactions.
- Merchants must provide an easy way to cancel the subscription or payment method online, regardless of how the cardholder initially interacted with the merchant (for example, a pop-up store in a shopping mall, door-to-door sales, or a TV/Radio ad).
Expanded Dispute Rights
- The existing dispute condition of “Misrepresentation” will be expanded, specifically for transactions where merchandise or digital goods have been purchased (i) through a trial period or (ii) as a one-off purchase, and the cardholder was not clearly advised of further billing after the purchase date.
- Merchants can remedy the dispute by proving that they have acted appropriately, provided they can show:
- The cardholder expressly agreed to future transactions at the time of the initial interaction; and
- The merchant electronically notified the cardholder (based on the details the cardholder provided) before processing new transactions following the trial/ promotional period.
- Existing specifications currently allows the Merchant Name Field to include free form text. No updates required.