VISA Updates Requirements for Subscription Merchants

Last Updated on April 29, 2020 by

Subscription merchants who offered free trials or an introductory promotional discount were facing some new requirements from VISA as a way to limit chargebacks and customer complaints. This is true whether you’re selling physical goods, like a food or clothing subscription service, or virtual services, like a streaming TV or music service, or even a monthly software subscription.

Prior to April 18, 2020, subscription merchants who offered a free trial or promotional discount had to send customers an email reminder and link seven days before initiating a recurring transaction if the trial or promotional period had ended, or the recurring agreement changed. They also had to send an electronic copy of the terms and conditions, even if the customer didn’t owe anything,

As of April 18, 2020, these enhanced notification requirements were going to expand to all subscription merchants around the globe.

Now, as a result of the pandemic shutdown, Visa has pushed out the effective date of the expansion to April 17, 2021.

According to Visa, the merchant’s new enhanced notifications must now contain:

• Confirmation that the customer agreed to a subscription.
• The start date of the subscription.
• Details of the goods and/or services they will receive.
• Ongoing transaction amounts and billing frequency or date
• An obvious hyperlink or other option to allow customers to easily cancel their subscription online.

Merchants must also send explicit transaction receipts, which must contain the following:

• The length of the trial or promotional period, or introductory offer, along with the “clear disclosure” that the cardholder will be charged unless they cancel future transactions.
• The date and amount of the first transaction, as well as for subsequent charges.
• A link that allows the customer to easily cancel future transactions online or via text message, regardless of how the cardholder subscribed. That means phone call subscriptions do not need to be phone call cancellations, and so on.

The April 18 Deadline Still Stands for Some Requirements

However — and this is very important — there are still some aspects of the updated policy that became effective on April 18, 2020.

According to a statement from Visa, they have told all their merchants, acquiring banks, and merchant service providers the following:

Disclosure, Notification and Cancellation Requirements

A significant number of consumers around the world are sheltering in place / at home, and many of them are utilizing subscription services for the first time, often with a trial or introductory promotional discount (e.g., digital content / streaming, delivery of food or other goods). To that end, the effective date for the additional aspects of the updated policy will remain 18 April 2020, including:

• Express cardholder consent for transactions beyond the promotional period, and the requirement for merchants to provide a copy of the accepted terms and conditions to the cardholder at the time of enrollment.
• Reminder notification to cardholder before the end of the trial / introductory promotional discount period.
• Enhanced transaction receipts disclosing the details of the trial / introductory promotional discount period, including clear disclosure that the cardholder will be charged unless the cardholder takes steps to cancel any subsequent transactions.
• Easier online cancellation, regardless of how the cardholder initially interacted with the merchant.

If you’re a subscription merchant and you want to know more about how Visa’s updated requirements will affect you, Corepay can help. For more information, please visit our website or call us at (866) 987-1969.

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