Effective 18 April 2020, Visa is updating acceptance, disclosure and dispute policies for transactions at merchants that offer free trials or introductory promotions as part of an ongoing subscription service.
To help you better understand these new rules, below are answers to some of the frequently asked questions.
Do the changes apply to only physical goods merchants?
No. The changes apply equally to merchants selling either physical or digital goods and services if they offer free trials or introductory promotions that roll into an ongoing subscription/recurring agreement.
Do the changes apply to all merchants that offer subscription/recurring agreements?
No. Not all merchants that offer subscription/recurring agreements include free trials or introductory promotions. The changes apply only to merchants that offer free trials or initial promotions that roll into an ongoing subscription/recurring agreement.
What is the enhanced descriptor for? Where is it required?
The enhanced descriptor (e.g., “trial”, “trial period”, “free trial”) is to be included in the Merchant Name field of the clearing record for the first transaction at the end of a trial period. It is not required for subsequent transactions.
This descriptor will then appear on cardholder statements, online banking, mobile apps and SMS/text alerts. In the same way, discretionary data or additional invoice/order numbers appear for e-commerce transactions today, to identify the nature of the transaction.
What if the customer doesn’t want electronic notifications or reminders?
Visa’s updated rules will require the merchant to notify the cardholder at least seven days ahead of the expiration of their trial/promotional period, along with a link or other simple mechanism to cancel the subscription, either online or via SMS/text message.
The notification/reminder should be electronic (i.e., via email or SMS/text). It can be possible via another method of communication if the cardholder agrees in advance.
What if the trial/promotional period is less than seven days?
If the merchant’s trial/promotional period is less than seven days, the initial confirmation provided to the cardholder should include the details required in the reminder (i.e., date of expiration of the trial/promotional period, link or another simple mechanism to cancel the subscription).
What does “simple cancellation” look like? Is there a maximum number of steps/clicks?
No. The customer must be able to cancel their subscription online with the merchant without needing to contact the merchant through another channel (e.g., a phone call). Merchants may continue to support other channels for customer service, including cancellation requests, in addition to an online service.
If the above FAQs does not answer your questions, do not hesitate to contact your Account Manager for more detailed information on this Rule update.