CORRECTION: Due to COVID19, Visa has extended its deadline for the new free trials billing mandate to 17 April 2021. “Visa is taking a tailored and pragmatic approach to rule compliance during the COVID-19 pandemic, focusing primarily on situations where payment system integrity is at risk.”

Let’s be real: When you offer a free trial, prospective customers stop reading about it at “free.” They see that word and plunge in; that’s why we do free trials. But they don’t expect the “trial” part to end the “free” part. So for subscription merchants, a vast portion of your transaction disputes come from that first recurring charge that concludes the “free” and moves users to “paid” subscribers.

Visa is very much aware of this, and they’ve issued new guidelines to reduce these disputes. The aim of Visa’s free trial mandate is to enable “greater transparency, choice, and control” for customers. They want merchants to improve cardholder recognition of and cancellation access to these charges. They also aim to help merchants and issuers with better dispute protocols and more accurate reason codes.

MERCHANT REQUIREMENTS

The new rules go into effect on April 17, 2021. Visa will be monitoring merchant compliance to these new rules. The new mandate requires merchants to provide their free trial customers with the following:

Express consent:

  • Merchants must obtain express cardholder consent to enter an ongoing subscription service with recurring bills.

Enhanced disclosures:

Merchants must issue a digital receipt upon trial signup with:

  • Subscription confirmation
  • Subscription start date and duration
  • Details of goods/services included
  • Recursion frequency and date of each payment
  • Notification at least 7 days prior to any changes to nature of agreement

Statement descriptors:

  • Descriptors are required to indicate they are for a free trial. Ideally this would go in the seller name field. Here is a sample compliant statement courtesy of Verifi:
Sample statement for compliamt free trial descriptor

Cancellation access

  • Email/text message of link to cancellation page, at least 7 days prior to rollover from free to paid subscription
  • Regardless of signup circumstance (in person, over phone, via internet), cardholders must have this link
  • “Merchants must provide an easy way to cancel the subscription or payment method online” [Visa]

Dispute reduction

  • Cardholder dispute rights have been expanded if they are not clearly informed as required above on future billings
  • Merchants must provide proof of adequate disclosure

CONCLUSION

All told, Visa’s free trial mandates are aimed at helping merchants. Transparency is good, and it will give you a boost in the CYA department when properly adhered to. Again, “Visa will undertake proactive monitoring and mystery shopping,” [Visa]. So be careful and get compliant, because Visa is watching.