New policies covering acceptance, discolosure and dispute from Visa & MasterCard, will affect all subscription businesses - including yours!
They're designed to reduce disputes by forcing vendors to communicate freemiums, trial offers, introductory deals and special promotions ...clearly
Visa & MasterCard require all vendors to follow their latest acceptance, disclosure and dispute policies covering subscriptions with any type of lower price which then goes onto a higher priced subscription.
Their new policies will enable greater customer recognition, easier cancellation and clearer dispute resolution.
Communicate The Price Change - Before it is Triggered
The new standards from Visa and Mastercard require the vendor to confirm the promotional offer in a recordable manner (typically email).
And then confirm the change to a subscription eg - free to paid, low trials, price increases etc. - BEFORE the new amount is taken.
The vendor must inform the subscriber before the price increase, and have a record of of that confirmation of intended price increase.
Another way to look at it would be - to allow the subscriber the opportunity to cancel before the price increases, as this should avoid any confusion and result in fewer disputes.
There's no way around this.
Vendors must revisit all their promotional offers and make sure the subscriber has had the opportunity to withdraw consent before the increased value is taken.
7 Day Notice - Minimum!
Vendors must give 7 days notice before a subscription price change is triggered.
If a trial is less than 7 days, you must inform the subscriber at the start of the trial.
Again, to avoid doubt, the notice must be recorded and the vendor must be able to show evidence of their notice if called upon to do so.
The cardholder expressly agreed to future transactions at the time of the initial interaction AND the merchant electronically notified the cardholder before processing new transactions, after the trial period ended.
Although it's not clear how Visa and MasterCard will police these policy updates - the penalty for not evidencing the price change was communicated to the subscriber, would be at the very least to lose any dispute.
Trial Periods Longer than 7 Days
A Recurring Billing Reminder does have to be sent for trial periods longer than 7 days. If the trial period is longer than 7 days, a reminder needs to be sent 7 days prior to the next automatic billing date.
Please open a ticket with our support team when setting up a trial period longer than 7 days so we can assist with this recurring billing reminder.
With MemberGate it's easy
Simply use the Welcome Email to re-state the Trial offer which the subscriber has taken advantage of.
This is copied to you as part of your onboarding email and provides you with a receipt of the message at the same time as was sent to the subscriber.
Credit Cards Compliance Management
It's not clear how they will police this, but it's expected that any subscriber asking for a refund would be supported by Visa and Mastercard, where the vendor does not have clear evidence of the subscriber agreeing to the increase.
Here is some further guidance direct from Visa which is quite useful: