Visa COVID-19 Update: Policy for Subscription Merchants Offering Free Trials
As we have already informed you in our previous blogs, Visa is updating its acceptance, disclosure and dispute policies for transactions at merchants that offer free trials or discounted introductory promotions as part of an ongoing subscription service. The changes apply to merchants selling either physical or digital goods and services if they offer free trials or introductory offers that roll into a recurring agreement.
New Visa Requirements
Here is the summary of the new Visa requirements:
- express consent to entering an ongoing subscription service for recurring payments
- enhanced electronic confirmation that contains a simple mechanism to enable the cardholder to cancel any subsequent transactions online easily
- explicit transaction receipts stating the length of any trial period, introductory offer or promotional period, including clear disclosure that the cardholder will be charged unless the cardholder takes steps to cancel any subsequent transactions
- easier cancellation similar to “unsubscribing” from an email distribution list
- additional statement descriptor (e.g., “trial,” “trial period,” “free trial”) that appears on cardholder statements
- expanded dispute rights and updated Visa complaint forms for issuers and cardholders
- expanded policy for negative option and up-selling merchants
As we are all struggling with the effects the COVID-19 pandemic has on our lives, Visa has decided to postpone some aspects of this new policy change to ease the impact of this situation on the payment system.
Enhanced Statement Descriptor
The effective date of the requirement to support an enhanced descriptor for the first transaction at the end of a trial or discounted promotional period will be postponed to 17 April 2021.
Disclosure, Notification and Cancellation Requirements
The effective date for the additional aspects of the updated policy will remain 18 April 2020.
Visa’s reasoning is that 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). Therefore, it is vital to keep this effective date unchanged.
These additional aspects include:
- 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
Visa is taking a pragmatic approach during the COVID-19 pandemic, focusing primarily on situations where payment system integrity is at risk. However, we strongly recommend that you remain compliant with the card scheme rules to avoid unnecessary disputes.