VISA Has Issued Updated Policies for Merchants Offering Free Trials or Introductory Promotions

Visa said that the changes are designed to promote an enhanced customer experience, enable cardholders and issuers to clearly identify these transactions and to bring more specificity and clarity to the disputes requirements.  Visa said that it 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.  These changes will enable cardholders to identify and take action on subscription transactions, which will reduce the need for disputes. 

The new policy applies 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.  In the Reminder Notice, Visa said that while it strongly recommends that all subscription merchants follow these new requirements, they are only mandatory for those that offer free/introductory trials.

The rules require that merchants do the following:

  1. Express Consent – At the time of enrollment, merchants must require the cardholder to expressly consent to entering into an ongoing subscription service for recurring payments
  2. Enhanced Notification – At the time of enrollment, merchants must send an electronic confirmation (i.e., email or SMS/text, if agreed with the cardholder) of the terms and conditions of the subscription service to the cardholder, even if no amount was due at the time, and the confirmation should include the following:  (i) confirmation that the cardholder has agreed to a subscription, unless the cardholder cancels; (ii) the start date of the subscription; (iii) details of the goods/services; (iv) the ongoing transaction amount and billing frequency/date; and (v) a link or other simple mechanism to enable the cardholder to easily cancel any subsequent transactions online.  The merchant must also send a reminder notification via email or other agreed method of communication, including a link to the merchant’s online cancellation policy at least 7 days before initiating a recurring transaction if a trial period, introductory offer, or promotional period is about to expire or the nature of the recurring agreement has changed.  If the trial/promotional period is less than 7 days, the initial confirmation provided to the cardholder should include the details required in the reminder.
  3. Explicit Transaction Receipts -  Merchants must disclose the following on transaction receipts:  (i) 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; (ii) the transaction amount and date for the initial transaction (even if no amount is due) and for subsequent recurring transactions; and (iii) a link or other simple mechanism to enable the cardholder to easily cancel any subsequent transactions online.
  4. Statement Descriptor – An additional descriptor indicating a trial period-related transaction will be required in the Merchant Name field of the Clearing Record for the first transaction at the end of a trial period.  The descriptor will then appear on cardholder statements, online banking, mobile apps, and SMS/text alerts, in the same way discretionary, additional invoice/order numbers appear for electronic commerce transactions.  Examples of possible descriptors are “trial”, “trial period”, “free trial”.
  5. Online Cancellation – Merchants must provide an easy way to cancel the subscription or payment method online, regardless of how the cardholder initially interacted with the merchant. 
  6. Expanded Dispute Rights – The existing dispute condition of “Misrepresentation” will be expanded, specifically for transactions where merchandise or digital goods have been purchased (i) through a trial period or (ii) as a one-off purchase, and the cardholder was not clearly advised of further billing after the purchase date.  Merchants will be able to remedy the dispute by proving that they have acted appropriately, provided they can show:  (i) the cardholder expressly agreed to future transactions at the time of the initial interaction; and (ii) the merchant electronically notified the cardholder before processing new transactions following the trial/promotional period.

Visa has stated that ongoing monitoring and enforcement are key to ensuring compliance; thus, Visa will undertake proactive monitoring and mystery shopping to ensure compliance.    

Additionally, Visa has enhanced its requirements for Up-Selling and Negative Option Merchants, effective April 18, 2020.  The updates can be viewed here

TAKEAWAY:  Visa’s requirements are consistent with the overall trend of increased scrutiny toward negative option plans.  We recommend that all merchants who offer ongoing subscription services continue to review their enrollment paths to ensure compliance with Visa’s rules and federal and state laws.  

Add a comment

Type the following characters: november, tango, whisky, papa, niner

* Indicates a required field.


Recent Posts



Jump to Page

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.