Free Trial Rules: How Does Mastercard’s Policy Compare to Visa’s?
- July 12, 2019
- < 1 Min Read
Both Mastercard® and Visa® have recently launched initiatives to update policies regulating negative option billing and subscriptions with free trials or introductory offers.
The two networks have the same basic goal: encourage merchants to communicate openly and honestly to improve the customer experience.
While the initiatives are similar, they have several significant differences. Merchants who process both Mastercard and Visa transactions should be aware of how policy expectations differ.
Check the side-by-side comparison for a high-level overview of the policies. More in-depth explanations can be found in the respective blog articles.
|Merchants Impacted||Merchants with a negative option billing model, the nutra industry being a particular focus||
Merchants who offer a free trial or introductory offer that turns into an ongoing subscription |
Merchants that offer up-sells
Merchants who use negative option billing, with or without a free trial
|Items Regulated||Physical goods||Physical goods, digital goods, and services|
|Enforcement Date||April 12, 2019||April 18, 2020|
|MCC Classification||5968: Direct Marketing—Continuity / Subscription Merchants||5968: Direct Marketing—Continuity / Subscription Merchants |
Digital goods or content subscriptions can use MCC 5815, 5816, 5817, or 5818
|Billing Descriptor Updates||Include the phone number (MO/TO) or URL where the customer shopped||Use the recurring payment indicator for the initial transaction |
Include “trial” or a similar phrase for the first post-trial transaction
|Relationships with Third-Party Service Providers||Disclose all service providers with access to cardholder data (for example, CRMs)||Not specified|
|Trial Start Date||Trial must start on the day the customer receives the product, not before||Not specified|
|Timing of Consent||After the trial has ended but before the card is charged||Before the initial transaction or the trial begins|
Date and amount of subsequent transactions
The date the merchant will attempt to charge the card again if the account has insufficient funds when the first attempt is made
|Merchant’s name |
Date and amount of subsequent transactions
Description of the goods or services being offered
Length of the trial period or introductory offer
Clear disclosure that the customer will be charged unless subsequent transactions are cancelled
Date the trial begins or the initial transaction date (if applicable)
Initial transaction amount (if applicable)
Last four digits of the card being used for the subscription
|Subscription Confirmation or Transaction Receipt||Sent after the trial ends||Sent immediately after customer consent has been granted|
|Additional Cardholder Notifications||
Sent after an approved authorization attempt|
Sent after an unsuccessful authorization attempt
Sent seven days before processing the first post-trial transaction |
Sent seven days before processing a transaction if the terms of the subscription have changed
|Cancellation Policy||Published on the website the customer shopped at||
Available online, regardless of how the customer shopped |
Include a digital, self-service cancellation option, such as completing an online form or sending a text message
|Disclosure of Cancellation Instructions||
After the trial has ended but before the card is charged|
After each subsequent authorization request
|Before the initial transaction or the trial begins |
Immediately after consent is granted
Before processing the first post-trial transaction
Any time subscription terms are updated
|Written Confirmation of Cancellation||Required||Not specified|
|Trial-Specific Reason Code||Not specified||If a transaction is disputed because the customer wasn’t aware of or didn’t agree to a subscription after the trial period, the issuer must use reason code 13.5 - Misrepresentation.|
|Compliance Monitoring||Inclusion in the Mastercard Registration Program||Mystery shopping|
Want More Information?
Mastercard and Visa have shared very detailed explanations of their new policies. However, compliance is still relatively subjective.
If you have questions about these new free trial rules or want help making necessary changes, don’t hesitate to contact our team of payment experts.