Effective April 18, 2020, Visa will be enacting enhancements to its existing policies for merchants who offer free trials or other introductory promotions as part of their subscription service marketing of physical or digital goods, where pricing changes from the initial trial period to the first bill. Visa’s changes are designed to enhance the cardholder experience by providing transparent agreement information, along with an easy and effective way to cancel the subscription at the cardholder’s discretion.
What these changes mean for merchants and acquirers
Although the policy changes are mandatory for merchants who use free trials or promotions to market their subscription services, all subscription merchants are recommended to adopt the policy as best practice. Unlike Mastercard’s equivalent policy updates, enforcement of and qualification for is not based on MCC classification. We have learned that enforcement of non-compliance will occur through mystery shopping and close monitoring of chargeback occurrences. Fees will be unchanged from the existing non-compliance assessment model.
New rules for initial engagement information and contact methods
| Enrollment Consent |
| At the time of enrollment, merchants are required to get the cardholder’s express consent for an ongoing subscription with recurring payments. |
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| Detailed Transaction Receipts & Information |
Subscription merchants 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:
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| Customer Notification |
| Merchants are required to notify the cardholder 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:
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| Enhanced Dynamic Descriptor |
| Enhanced dynamic descriptor indicating “trial, trial ended, or free trial” must be listed in the Merchant Name field of the clearing record. Enhanced descriptor can be moved to discretionary field for invoice numbers, etc. for subsequent bank statements and communications |
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| Online Subscription Cancellation |
| Merchants must provide an online opt-out link that ensures the customer’s online opt-out link that ensures the customer’s 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. |
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Dispute Rights
- 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
-AND-
Cardholder was not clearly informed of future billing after the purchase or engagement date
Dispute Remedies
- Merchant must provide the following compelling evidence:
- Cardholder expressly agreed to future transaction at the time of initial interaction
- Merchant electronically notified the cardholder (based on details provided by cardholder) prior to processing a transaction after the trial period ended
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. According to Visa, these policy changes are designed to enhance the cardholder experience by providing additional transaction details and put more control in the cardholder’s hands. Verifi’s dispute prevention solutions were built with the goal of enhancing customer experience.
Verifi’s Order Insight® solution (now including VMPI) enables merchants that promote free trial or introductory offers to supply detailed transaction data to issuing banks for use when a cardholder raises a dispute. This helps to clear up billing confusion at first customer inquiry in the issuers call center, as well as provide cardholders with all the details of their purchases, easily accessed through their issuer’s online or mobile channels.
Verifi’s Cardholder Dispute Resolution Network™ (CDRN®) keeps you protected. Should a cardholder forget to cancel and call the issuer to initiate a chargeback, our patented, closed-loop network provides you the opportunity to resolve the dispute directly with the cardholder, without involving your acquirer or any card brand, and avoid a chargeback.