Updated Policy for Subscription Merchants Offering Free Trials or Introductory Promotions
REGIONS: US, AP, Canada, CEMEA, LAC
20 JUN 2019
To enable greater customer recognition, easier cancellation and clearer dispute rights, Visa is updating its rules related to transactions at merchants that offer free trials or introductory offers as part of an ongoing subscription service.
Visa has policies, rules and requirements in place to regulate subscription and “negative option” merchants dating back to 2011, including express, informed consent from customers after required disclosures and a simple cancellation mechanism.
Upon further review of its existing rules, Visa recognizes that free trials or introductory offers that roll into ongoing subscriptions or recurring charges can lead to problems for cardholders and clients, including multimillion-dollar operational cost increases due to high call center volumes, customer complaints, write-offs and card closures / re-issuances. To address these concerns and help provide clarity for all parties, Visa is updating its acceptance, disclosure and cancellation policies effective 18 April 2020.
Additionally, Visa has identified potential solutions to the following pain points around notification, identification and resolution of issues with these transactions:
- Cardholder complaints and confusion. After taking advantage of a free trial • Disputes or introductory offer, cardholders often forget or do not understand that they had agreed to future transactions at the time of the original enrollment or purchase. They also find it difficult to cancel the subscription. This can lead to an increase in customer service contacts for both merchants and issuers.
- Tracking and monitoring difficulties. Currently, no mechanism is available to distinguish transactions involving promotional or introductory offers from any other subscription / recurring transaction. Helping cardholders to better identify these types of transactions is in all parties’ interest in order to reduce confusion and/or frustration, customer service issues and disputes.
- Lack of issuer clarity on available dispute rights. There is confusion regarding dispute rights for issuers to address recurring transactions after an initial free trial / promotional period ends. Some issuers raise disputes as “Fraud,” some as “Cancelled Recurring” and others as “Goods / Services Not Received.”
Subscription Merchant Transaction Policy Updates
The changes are designed to (1) promote an enhanced cardholder experience; (2) enable issuers to clearly identify these transactions; and (3) bring more specificity and clarity to the disputes requirements. With these changes, cardholders will be provided clearer information, enabling them to identify, recognize and take action on subscription transactions, reducing the need for disputes. Specifically, cardholders will benefit from:
- Opportunities to expressly acknowledge the ongoing subscription agreement
- Immediate confirmation of the terms of the agreement
- Proactive notification of future transactions
- Easier cancellation
The changes apply equally to merchants selling either physical or digital goods and services, if they offer free trials or introductory offers that roll into an ongoing subscription / recurring agreement. There are no new indicators or other changes to these transactions that issuers or acquirers need to cater for.