At the end of 2021, Mastercard implemented new rules regarding “negative option billing,” with even more rules going into effect on June 8, 2022. Examples of negative option billing might include a free trial that automatically renews to a paid membership; or a membership to your website that has an introductory rate of $2.99 but renews at $19.99.
If you are thinking that there is nothing new about this, you are correct. Visa enacted this rule a couple of years ago, but they have not really enforced it until 2022, so that is new.
The following are already in effect as of December 2022:
The following take effect in June:
I’ve found that the self-service options, where a cardholder doesn’t need to engage in a chat or sit on hold with a call center, have been the most effective method in fulfilling the Visa and Mastercard requirements. Of course, you have the option to incentivize your member to stay by offering a discounted month during the cancellation process. Still, ultimately, if the member wants to leave, it’s better to let them than to face a deluge of disputes after the first rebill cycle.
Just a little advice, if your attitude is along the lines of, “old news, nothing will change,” just be advised that just because Visa did not enforce the rule before, does not mean that now that the merchant acquirers are on the same page that they will not start enforcing it now. They will, and they are; besides, if you are the consumer, you do not want unexpected surprises, treat your customer the way you want to be treated.
One other “program enhancement” that is being brought into service this month assessing a fee for submitting expired payment credentials to the card payment networks. What this means is if your rebill file contains expired card numbers, and those expired card numbers are used to attempt a sale, not only will it be declined, but another fee will be assessed on top of that.
This brings me to a helpful tool you may want to consider is an automatic card updater – offered by most gateway providers. An automatic card updater is a passive service that automatically queries issuing banks for expiring payment credentials and can be invaluable in keeping a healthy rebill file running optimally month after month. How it works is it detects payment credentials that will be expiring soon and begins querying issuing banks. If the issuing bank participates in the card updater program, your tokenized on-file payment credentials will automatically be updated. From here, you can continue to offer your membership service to your customer without interruption, saving time and resources.Return to Blog