Product subscriptions and free trials are a great way for many merchants to increase sales and maintain repeat business.
But sometimes customers forget they signed up for a trial or they have an active subscription to a product they no longer want.
When a consumer is charged for the full price of a trial or they continue to pay for product subscription they no longer need, some companies have made it very difficult to cancel such transactions.
Mastercard is now implementing a new rule for merchants that requires they notify consumers again before charging their credit for either the full price of a trial or every time the merchants schedules to ship a product.
“The rule change will require merchants to gain cardholder approval at the conclusion of the trial before they start billing. To help cardholders with that decision, merchants will be required to send the cardholder – either by email or text – the transaction amount, payment date, merchant name along with explicit instructions on how to cancel a trial.”
Better Disclosure on Credit Card Statements
The company will also require that “…all charges that appear on the cardholder’s statement must now include the merchant website URL or the phone number of the store where the cardholder made the purchase.”
It appears this rule change is becoming effective immediately. That means sellers who offer product trials or product subscriptions must change their notification process now.
Merchants should contact their payment processor and request more information on this new rule change by Mastercard.
It is unclear what sanctions Mastercard may place on merchants that do not comply with this new policy. But losing the ability to accept Mastercard payments would be a huge blow for many online retailers.
With Mastercard implementing this new policy, Visa, American Express, and others may not be that far behind.
What do you think of this new rule change by Mastercard? Please use the comments section below or head over to our Facebook Group for Small Business Sellers and interact with other small business owners.