Visa requires that all Merchants offering free or reduced-price offers or trials to communicate terms: before purchase, immediately after the first transaction, and then seven days before the free trial or reduced-offer concludes. The specifics are detailed below.
The new requirements were introduced on April 18th, 2020, with additional rules required in April 2021. The Visa rules conform to and will help you comply with Federal rules concerning negative option marketing plans. A negative option is an arrangement where goods or services are sent to a consumer automatically unless notification is sent to the Merchant to terminate the agreement.
- Before the transaction is completed, the Merchant must:
- Disclose to the Cardholder:
- Merchant Name;
- Description of product, services, digital goods being offered;
- Length of the trial period or introductory offer;
- The subscription/recurring charges if the customer does not cancel;
- Date trial begins or initial transaction date;
- Initial transaction amount (if applicable);
- Date and amount of subsequent transactions;
- Last four digits of the card used in the purchase;
- Cancellation policy.
- Obtain express Cardholder consent for any following transactions at the time of the original sale. If the transaction is eCommerce, consent should be obtained through a “click to accept” button on the checkout page that makes clear to the consumer they will incur charges.
- Disclose to the Cardholder:
- Immediately after the first transaction, the Merchant will send the Cardholder a transaction receipt - even for a $0 purchase - that includes all the information on the above disclosure list plus:
- Confirmation, the customer, has agreed to the free trial, introductory offer, and/or the subsequent subscription/recurring transaction;
- Instructions on how to cancel subscription/recurring charges.
- Seven days before the trial or introductory period ends, the Merchant must remind the Cardholder of the upcoming subscription/recurring transaction. The communication must include the cancellation policy and instructions on how to cancel subscription/recurring charges. For ANY subscription or recurring charge where a price change or billing time period changes, the Merchant needs to communicate the explicit information about: the change, the cancellation policy, and instructions on how to cancel subscription/recurring charges.
- EFFECTIVE APRIL 2021: Add Trial to the Merchant Descriptor. A Merchant descriptor is what appears on a Cardholder’s statement after they make a purchase. The goal is to identify the transaction to the Cardholder, and what will display is also dependent on the issuer and their ability to display the data. Qualpay by default will send through your DBA (Doing Business As) and your customer service telephone number. However, the gateway you use has the ability also to send this information to Qualpay and, if received, will supersede the default we supply to the issuer. Talk to your gateway provider about how to support this requirement. The descriptor will contain information about the trial period, introductory offer, or promotional period. Acceptable terms:
- Free Trial
- Trial Period
- Discount Offer
Subsequent transactions need to use the recurring transaction indicator.
Historically, free trial Merchants have been challenged to win disputes. As part of the new requirements, Visa indicated that to win these types of disputes; the following compelling evidence should be used with dispute reason code of 13.5 (Misrepresentation):
(1) Proof that at the time of the initial transaction, the Cardholder expressly agreed to future purchases.
(2) Evidence that the Merchant notified the Cardholder of future Transactions at least seven days before the Transaction Date.