VISA logos on blue background on subscription and recurring payments guidelines

[UPDATE] New VISA Rules for Free Introductory Promotional Terms or Free Trials

VISA has issued new rules concerning the acceptance, disclosure and notice obligations of merchants conducting free trial offers and introductory or promotional offers that

As I originally reported in November, VISA has issued new rules concerning the acceptance, disclosure and notice obligations of merchants conducting free trial offers and introductory or promotional offers (“Promotional Term”) that convert to paid programs. These changes go into effect April 18, 2020.

Applicability. It has been confirmed that the rules apply to not just free trials but also introductory or discounted offers that convert to regular pricing. They will not apply to stepped up pricing if the first term is not touted as being a promotional or introductory rate.

Enrollment Disclosures.   Current VISA rules require merchants offering a negative option transaction to obtain a consumer’s express informed consent to the offer by disclosing all purchase terms and conditions before initiating the initial transaction, which requires full disclosure of the terms of the offer. Express informed consent does not require a check box but the terms have to be clear and there are specific requirements that need to be disclosed. Most of you are probably already adhering to these requirements but there could be some nuanced language changes needed. *

Notices Required To Be Sent Post Transaction:

  • Transaction Receipt: The current rules require a merchant to provide consumers with a receipt of the transaction containing a description of the purchase. The revised rules will require merchants to include all the revised enrollment disclosures noted above. This is probably already done by most of you. If you are not already adding the last four digits of the card being used this is now required on this receipt.
  • Additional Notices: The revised rules will require merchants to send a written notice to consumers containing the revised enrollment disclosures at least 7 days prior to initiating a subsequent payment transaction after the Promotional Term is going to end. This is in addition to the initial transaction receipt. This additional notice must also be sent any time the price is changing or other terms of the agreement have changed (in which case the additional notice must include the changed terms).
  • Combined Transaction Receipt and Additional Notice: Visa has indicated that if the Promotional Term is 7 days or less the transaction receipt and additional notice can be one and the same document. Whether any Promotional Term that is more than 7 days would enable a combined transaction receipt/additional notice is still unclear, but Visa has indicated that a 30 day Promotional Term would not be sufficiently short to avoid having to send both a transaction receipt and the additional notice. Again, this additional notice has to be sent no less than 7 days before the end of the Promotional Term.

Method of Dissemination: The notices are supposed to be sent electronically even if the offer was accepted offline.  It is unclear how to handle this if you don’t have an email address, or for that matter, a working email address for the consumer.

Billing Descriptors.  After the Promotional Term the first full charge must include a billing descriptor that indicates it is the end of the initial term/offer. The suggestion provided by Visa was 8 characters “endtrial” –  but with only 25 characters to work with and with “trial” not being applicable to all promotional offers this could be confusing.

Cancelation: Merchants must provide a simple way for consumers to cancel to avoid future charges. The required receipt/notice sent electronically must contain a link to a page on the merchant’s website where the subsequent transaction can be easily cancelled. This mirrors the requirement for Wash DC. The online cancelation is required regardless of how the consumer signed up for the products or services.

Takeaway: These new requirements for free trials and introductory or promotional offers may require some changes to your enrollment practices but more likely will entail changes to your post-transaction notifications and procedures. There also might be ways to avoid falling into the definition of a Promotional Term. More FAQs from Visa are presumably due out in Jan/Feb on that very definition, as well as other issues. I will keep you posted.  

*In order to receive expressed informed consent, the terms of the offer have to disclose:

  • The name of the merchant
  • A description of the goods and services
  • The transaction amount and date(s) for recurring charges
  • The length of any trial period after which the consumer will be charged for the goods or services if not cancelled
  • The merchant’s cancellation policy
  • That the consumer will be charged unless they take steps to cancel subsequent transactions
  • The transaction amount and transaction date for the initial transaction (even if no amount is due)
  • The last four digits of the account number to be charged (which is impossible to do if you don’t have the card yet so we are waiting for clarification, but which is apparently required now under Visa’s current stored card requirements)
  • Instructions for an easy way to cancel the agreement or subsequent charges

 

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