With the postponement of Visa’s April 2020 Business Enhancement Rules (BER), we’ve received a number of questions around which changes are happening now versus those that are delayed. This article will provide clarification on what sellers need to be prepared for, now and in the coming months. Effective dates for each aspect of this rule change are detailed below.
As shared previously, Visa has enhanced policies for sellers who offer free trials or other introductory promotions as part of their subscription service for physical or digital goods, in which pricing changes from the initial trial period to the first bill may occur.
Visa’s changes are designed to enhance the customer experience by providing transparent agreement information, along with an easy and effective way to cancel the subscription at the customer’s discretion. Given the increase in online and subscription payments with customers largely conducting purchases at home – there is a greater need for increased transparency for subscription transactions with a free trial offer.
What these changes mean for sellers and acquirers
Although the policy changes are mandatory for sellers who use free trials or promotions to market their subscription services, all subscription sellers are encouraged to adopt the policy as best practice. Enforcement and qualification will occur through mystery shopping and close monitoring of dispute activity directly by Visa. Fees will be unchanged from the existing non-compliance assessment model.
New rules for initial engagement information and contact methods
Enrollment Consent – Effective 18 April 2020
At the time of enrollment, sellers are required to get the customer’s express consent for an ongoing subscription with recurring payments. Visa allows for flexibility in how sellers obtain customer consent. Check box, digital signature, etc. are encouraged, and the language expressing specifically what the customer is agreeing to must be clear and easy to understand.
Detailed Transaction Receipts & Information – Effective 18 April 2020
Subscription sellers that utilize free trial promotional offers must document and provide their customer the following on the initial engagement of service, as well as all subsequent transactions in a detailed transaction receipt:
- Customer confirmation of agreement
- Details of goods/services
- Subscription start and end date
- Ongoing transaction amount
- Billing frequency
- Subscription cancellation link
- Subscription terms and conditions
- Notice of changes to agreement
EXAMPLE (Fictitious Company):
Customer Notification – Effective 18 April 2020
Sellers are required to notify the customer 7 days prior to the free trial ending.
If the trial is less than 7 days, the end date must be included in the trial confirmation.
Elements of the reminder notification:
- Confirmation of active subscription agreement
- Start date of subscription
- Details of goods/services
- Ongoing transaction amount, billing frequency, and date
- Simple cancellation link
Enhanced Dynamic Descriptor – Effective 17 April 2021
Enhanced dynamic descriptor indicating “trial, trial ended, or free trial” must be listed in the Seller Name field of the clearing record.
Enhanced descriptor can be moved to discretionary field for invoice numbers, etc. for subsequent communications.
Dynamic descriptor support may vary by acquirer. We recommend reaching out to your acquirer to confirm how they are supporting this change.
Online Subscription Cancellation – Effective 18 April 2020
Sellers must provide an online opt-out link, which ensures the customer opt-out experience is as simple as clicking an “unsubscribe” link.
Online cancellation must be facilitated, even when products/services are purchased and delivered in-person.
Dispute Rights – Effective 18 April 2020
Free trial/promotional disputes will be classified under the expanded Visa Dispute Code 13.5 / Misrepresentation to include:
- Digital and physical goods and services purchased through a trial period or one-off purchase
- Customer was not clearly informed of future billing after the purchase or engagement date
Seller must provide the following compelling evidence:
- Customer expressly agreed to future transaction at the time of initial interaction
- Seller electronically notified the customer (based on details provided by customer) prior to processing a transaction after the trial period ended
Monitoring and Compliance
Recognizing the impact of this requirement update, Visa issued the below statement in a recent VBN communications:
As announced in the 31 March 2020 edition of the Visa Business News, Visa is taking a tailored and pragmatic approach to rule compliance during the COVID-19 pandemic, focusing primarily on situations where payment system integrity is at risk.
As such, Visa will delay proactive enforcement of compliance actions related to this policy.*
Today, everything from music and movie streaming to gym memberships and nutraceuticals are offered as subscription services with introductory trial offers that are easy to engage with, easy to forget about, and sometimes very difficult to cancel. These policy changes are designed to enhance customer experience by providing additional transaction details and put more control in the customer’s hands. Given the current global public health concerns, communication and transparency are more important than ever to ensure a positive customer experience – a key focus in Verifi’s dispute prevention solutions.
Verifi’s global data-sharing network, Order Insight®, enables sellers to provide enhanced billing descriptors directly to customers, delivered via banking portal or mobile app by participating Visa issuers. With customer access to this order information at the point of inquiry, not only can you ensure compliance with Visa’s new requirements, but this increased transparency can help reduce disputes.
If you have any questions about ensuring your compliance with these pending updates, please reach out to your Relationship Manager or Verifi Customer Support.
* Visa Business News Article ID AI09962, published 14 April 2020.