Visa Trial Subscription Updates—What You Need to Know

Visa Trial Subscription Updates—What You Need to Know

visa trial subscription updates

From April 18, 2020, Visa will update its rules regarding subscriptions. The new conditions will introduce greater transparency and control for customers. Here’s what you need to know about the new rules.

Learn the recommendations carefully and apply all requirements to your systems to stay compliant with the Visa updates before they come into effect. Continue reading to find out what you have to do to meet the requirements.

What’s new for merchants?

The new rules apply to merchants who sell both physical and digital goods and services and offer trial subscriptions.

Visa’s document provides several obligations for merchants that require them to deliver specific information to cardholders. Here’s what you need to prepare for:

Express consent—you must require cardholders’ consent before they enter into an ongoing subscription service for recurring payments.
Enhanced notifications—your obligation will be to provide cardholders with a copy of your terms and conditions at the time of enrollment. You can do it by SMS, email, or any other method agreed with the cardholder. Here’s what you need to include:

    • Confirmation that cardholders agreed to enter into the subscription
    • Subscription start date
    • Details of goods and services
    • Transaction amount and billing frequency/date
    • Link or a similar simple mechanism to cancel the subscription online.

Moreover, you must notify cardholders at least 7 days before  initiating a recurring transaction if a trial period expires or there are changes to the subscription (e.g. price or billing period).

Explicit transaction receipts—you must include the following information on transaction receipts:

    • Length of trial or promotional period and details
    • Date and amount of the transaction even if the initial transaction comes with no amount
    • Link or any other simple mechanism to cancel the subscription online.

Statement descriptor—provide an additional descriptor of the subscription transaction (e.g. free trial, trial period, trial) that appears on a cardholder’s bank statement. This will help to reduce disputes, as one of the most common reasons for subscription chargebacks is when cardholders don’t recognize or don’t remember the subscription charge.
Easier cancellation—you must provide an easy way to cancel the subscription online. This one also helps to mitigate the risk of chargebacks, as cardholders initiate disputes when they forget or find it difficult to cancel a subscription.
Expanded dispute rights—Visa expands the dispute condition of “Misrepresentation” for transactions where goods are purchased through a trial period and a cardholder wasn’t aware of further billing after the initial purchase. To prove that you have acted appropriately, you should provide the bank with the following evidence:

    • A proof that the cardholder expressly agreed to future transactions
    • Evidence that you electronically notified the cardholder before processing new transactions.

How will customers benefit from Visa trial subscription updates?

Visa updates are designed for greater transparency, hence might help customers to understand how free trials work and that they are going to be charged for next purchases. Besides the transparency, Visa points out four main benefits for cardholders:

Opportunity to expressly accept the ongoing subscription agreement
Immediate confirmation from the merchants of the terms and conditions of subscription which cardholders signed up for, hence less confusion among customers
Clear notifications of future transactions
Easier cancellation.

All the changes are designed to enhance customer experience so that customers can be more comfortable when they initiate subscription payments on websites that offer trials, as according to Visa, such transactions cause problems for all parties involved.

What are the reasons for the changes?

The main reason is keeping cardholders more aware of their recurring purchases. With greater transparency and better user experience also comes a lower chance of chargebacks.

New rules will make recurring transactions easier to identify and recognizable by both cardholders and issuers. So the update enables both sides to take action on subscription transactions, which might result in fewer disputes.

Be prepared

To sum up, if you provide a free trial or introductory offers that turn into an ongoing subscription service, adjust the updates to your payment system. Visa will actively monitor whether merchants follow the rules effective from 18 April 2020.

We highly recommend making any appropriate updates to your systems and procedures to make sure that you have all mandatory changes in place before Visa’s implementation timeline.

The following two tabs change content below.
Sandra Wróbel-Konior

Sandra Wróbel-Konior

A well-established Content Marketing Specialist with a tech-savvy personality, experience in writing, and a passion for reading. Staying up to date with the latest technology and social media trends, in love with GIFs and craft chocolate.

Bitcoin and Other Cryptocurrencies—How To Buy Them