Visa has announced several new policy updates that promise to affect merchants who free and discounted trial billing models. The new policies are expected to take effect on April 18, 2020.
Basically, if you offer free and discounted trial periods before charging full price for your service or product (i.e. subscriptions like trunk clubs and streaming entertainment), you will be expected to comply with these new policies aimed at better protecting consumers.
While these new policies are geared toward protecting cardholders, merchants can benefit as well. One common problem is that providers of subscription services or free trial periods are hit with higher-than-normal chargebacks, since customers often forget they signed up for the service in the first place, or planned to use the free trial and then cancel, but forgot to cancel before the deadline.
Here’s how these policies are expected to affect merchants.
- Stronger notifications of future billing: Visa will consider it “misrepresentation” if merchants do not clearly advise cardholders about future billing after a trial period. There will be an extra step during registration where merchants are expected to disclose the future billing and the cardholder is given the chance to accept it.
- Improved disclosure requirements: Merchants who enroll customers in ongoing programs are expected to provide a digital receipt (email or text) that explains all the terms and ongoing obligations. And to cut down on “Oops, I forgot” chargebacks, Visa is requiring electronic notification with cancellation links (see below) at least 7 days before the customers receive their first rebilling charge.
- Simpler cancellation methods: Merchants are expected to provide their customers a way to cancel purchases online more easily and with less effort. This means no more calling into customer service to cancel. Also, online cancellation is supposed to be available regardless of how the cardholder initially paid, whether it was in-store, online, over the phone, or face-to-face. Cancellation should be as easy as unsubscribing from an email newsletter.
- Increased merchant monitoring: Visa will monitor merchants’ transaction compliance to ensure they’re following these new policies, including using mystery shoppers to randomly check compliance. This means your next customer could be a mystery shopper checking up on you.
If you have questions about how these new policy changes will affect you and your business, Corepay can help you navigate the new rules and help you develop the strategies to help you comply. Just visit our website at corepay.net, or contact us by email at in**@co*****.net