- Posted by Mitch Farber
- Ecommerce Solutions, Industry News, Payment Gateway, Retail/Mobile Swipe
New Mastercard Rules That Will Effect Your Business
Recent and upcoming rules from Mastercard
Mastercard Negative Option Billing Rules
In November 2021, MasterCard announced changes to its rules for subscription merchants. MasterCard is issuing new rules that go into effect for all negative option billing merchants that offer a free or low-cost trial period of a digital good (such as streaming service, club membership, website access, or software license) and then automatically enroll the cardholder into a subscription plan at the end of the trial period.
These new rules are similar to Visa's 2020 changes, such as permitting customers to cancel online, disclosing the terms of the subscription during enrollment, and obtaining an affirmative agreement from the customer.
Like Visa, MasterCard will require merchants to remind customers of upcoming payments, but MasterCard will only impose this requirement for plans that use any form of negative option billing (including free trials) as well as those where recurring payments are spaced at least 6 months apart.
Effective December 8, 2021, the following revised standards will apply:
- No less than three days and no more than seven days before the end of the trial period, or whenever terms and conditions will change, the merchant must send a reminder notification to the cardholder that the subscription plan will commence if the cardholder does not cancel. This notification must include the basic terms of the subscription and instructions about how to cancel. This reminder can be completed by email message or any other electronic method. Merchants must send a confirmation by email message or by any other electronic method at the time of enrollment in a subscription/recurring billing plan that provides the terms of the subscription, including the terms of a trial period when applicable, and clear instructions about how to cancel the subscription.
- Merchants must send a confirmation by email message or by any other electronic method at the time of enrollment in a subscription/recurring billing plan that provides the terms of the subscription, including the terms of a trial period when applicable, and clear instructions about how to cancel the subscription.
- Merchants must send a receipt by email message or by any other electronic method after every billing that includes clear instructions for how to cancel the subscription.
- Merchants must provide an online or electronic cancellation method (similar to unsubscribing from email messages or any other electronic method).
- For any subscription/recurring payment plan that bills a cardholder less frequently than every six months (180 days), the merchant must send a notification no less than three days and no more than seven days before the billing date that includes the terms of the subscription and instructions about how a cardholder may cancel the subscription.
The Following New Rules Become Effective June 8, 2022
Don't miss this important deadline.
- Merchants must clearly disclose the basic terms of the subscription at the point of payment and capture the cardholder’s affirmative acceptance of such terms. The disclosure must include the price that will be billed and the frequency of the billing (for example, "You will be billed USD 9.95 per month until you cancel the subscription.").
- Merchants that utilize a negative option billing model must also disclose the terms of the trial, including any initial charges, the length of the trial period, and the price and frequency of the subsequent subscription (for example, "You will be billed USD 2.99 today for a 30-day trial. Once the trial ends, you will be billed USD 19.99 each month thereafter until you cancel.")
- For electronic commerce (e-commerce) merchants, the point of payment includes the screen where cardholders enter their card credentials and any screens that show a summary of the order (such as a shopping cart) before it is submitted for authorization by the cardholder.
- Please note: Providing a link to another page that contains this information (such as a terms and conditions page), or otherwise requiring the cardholder to expand a message box or scroll down the page to see the terms, will not satisfy this requirement.
The NETbilling system can automatically send emails to your customers on your behalf. There are two steps to set up these automatic emails. You can custom create the emails to be sent (or use the pre-set email templates supplied by the NETbilling system), but you must choose when and to whom those emails are sent. You can find additional information about email setup here.
If you have any questions regarding these rules, please consult your merchant account provider.