Visa’s New Free-Trial Mandate: What You Need to Know
To reduce chargebacks for subscription-related charges originating from free trials and similar promotional offers, Visa has released the Free Trial Mandate to provide clearer information to consumers related to these types of charges. Specifically, Visa has mandated that merchants who offer a promotional period that rolls into a paid subscription must abide by the following rules:
Merchants must obtain express consent from consumers at the time of initial sign-up. This consent will serve to notify the user of an ongoing subscription commitment post-trial.
Merchants must provide enhanced electronic communication, delivered upon initial sign-up and on a specific cadence prior to the trial ending and subscription modification.
This enhanced communication must also provide a simple mechanism for the consumer to cancel their subscription online, without having to contact the merchant.
Merchants must include specific verbiage and indicators in their transaction requests, which may appear on cardholders’ statements.
Specific details on these requirements are listed within Visa’s documentation linked above.
As a subscription business, how will this affect me?
Visa will expand the dispute condition related to “misrepresentation” for transactions associated with either free trials or one-off purchases that roll into a recurring subscription where the consumer was not properly notified of these further billings.
Because of the increased specificity of this dispute condition, merchants can benefit from the mandated changes as they will (1) serve as evidence that the merchant was acting in accordance with Visa’s guidelines when resolving disputes, and (2) provide greater clarity to the subscriber which may lessen the number of disputes arising as a result of consumers’ confusion surrounding these types of payments.
How is Recurly supporting this?
Currently, Recurly offers all the tools to support this mandate, although you will need to make some updates to your integration, as outlined in the sections below. Merchants who do not use Recurly’s hosted payment pages and emails can expect to have to ensure certain compliance aspects on their own. See the next section for more information.
Express consent Recurly’s hosted payment pages support this requirement via a checkbox confirming agreement to a merchant’s terms and conditions at the time of checkout. The consumer will not be able to proceed without expressly agreeing.
Enhanced notifications Recurly has a suite of built-in email templates that can be sent in accordance with the cadence which Visa is mandating. Some adjustments to your configuration may be needed. More specific information on the configuration of these templates can be found in our documentation.
Statement descriptors Recurly is currently working to implement the changes needed to comply with Visa’s rules. In most cases, merchants should not need to perform additional configurations, although some merchants may need to enable a specific setting at the gateway-level. Please review our documentation for more information on the requirements for each gateway.
Recurring indicator The recurring indicator requirement is part of a previous mandate released by Visa with which Recurly is already compliant. As a Recurly customer, no changes are required on your end to support this. More information on this can be found in a previous Recurly blog post.
Ascertaining That Your Business is Compliant
Please keep in mind that if you don’t use Recurly’s hosted solutions, we recommend reviewing Visa’s documentation to ensure that the solutions you’re using are properly configured to support the requirements of the mandate. The main things to keep in mind are:
Does your checkout page include the necessary mechanism to obtain express consent from your customers?
Do your electronic notifications include the proper information, as outlined by Visa?
Are your electronic notifications sent at the cadences outlined by Visa?
Do your electronic notifications include a simple mechanism that allows consumers to cancel future, recurring billing online, without the need to contact you and your team?
As a partner in the payments space, Recurly continues to track and adapt to new card brand requirements as they are released. This involves remaining in constant communication with each gateway partner we work with to understand and implement any changes necessary to maintain a high level of security and compliance with each of our integrations.
If you have questions regarding this or other compliance mandates, please contact Support.