VISA regulation updates for Trial subscriptions

Offering a trial subscription to Customers can be a very successful marketing strategy, but has also proven to generate a high number of customer complaints and chargebacks. In an attempt to improve this industry process, VISA communicated new guidelines last year, and were to be enforced in April 2020. Due to the Covid 19 pandemic, merchants now have until July to implement.

The following document from Visa does a good job of summarizing the guidelines that were requested to be implemented. The most important points to emphasize that may be new to merchants are as follows:

  • Who does this effect? Globally, merchants selling both physical and digital goods and services who offer free trials or a reduced introductory offer as part of a subscription (“recurring”) service.
  • At the time of enrollment, merchants must send additional confirmation of the terms of the trial, and require express consent from cardholder.
  • Merchants must include “trial” in the billing descriptor name field, which would require a dynamic descriptor setup with their shopping cart and gateway. This function must also be enabled at the processor level for your merchant ID VAR file.
  • Merchant must have proof of notification sent to cardholder at least 7 days prior to their first re-bill (only) with clear and easy instructions for online cancellation

The dynamic billing descriptor function has been utilized for some time now by third party billing providers such as Paypal and Square. Although this function is a fairly simple implementation, it does require either Merchant to control the message at the transaction level in the API authorization request OR to be pre-configured at the gateway account settings. In the case of the later, this function must therefore be supported by the Gateway.

Failure to comply may result in suspension or termination by your Merchant Service provider and Bank. For assistance in implementing this, contact us now.