Chargeback Prevention

Visa Trial and Subscription Mandate Explained

Visa Trial and Subscription Mandate-2

Everybody loves the “free” part of a free trial offer. The “trial” part, on the other hand, often gets contentious. Subscription-based merchants who entice new customers with trial offers at discounted rates often get enthusiastic signups from curious customers who might balk at committing to a full-price subscription, but when automatic renewals kick in at the regular price many of those same customers forget what they signed up for and proceed directly to their bank to dispute the charge. To avoid this all-too-common scenario, Visa is introducing a new mandate regulating free subscriptions and promotional offers. What do subscription-based merchants need to know as we draw closer to the April 2020 compliance deadline?

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What is Visa Subscription Mandate?

Visa Subscription Mandate is a Visa policy providing rules for enhanced merchant to consumer transaction disclosure, transparent consumer cancellation options, revised consumer dispute rights and merchant participation monitoring.

Visa’s objective is to reduce cardholder frustration and prevent needless disputes by enacting rules that will make it easier for purchasers to understand exactly what they’re signing up for and how they will be billed, and to have an easy, hassle-free path to cancellation if they decide not to continue with the subscription. At the same time, Visa is trying to avoid introducing new complications and requirements into the payment ecosystem that would cause friction for customers or place a heavy burden on merchants and payment processors.

It’s not easy keeping up with every card network mandate, but remember that being proactive about understanding new mandates and making the necessary adjustments to your business operations won’t just help you avoid getting a slap on the wrist from Visa, it will also help you avoid chargebacks and serve your customers better.

Why Do Promotional Subscription Offers Lead to Chargebacks?

Once a free trial offer expires, it is extremely common to see the first regular recurring charge turn into a dispute or chargeback. For the most part, these are not cardholders out to game the system by engaging in “friendly fraud.” They’re quite happy to stop receiving whatever goods or services they signed up for as long as the charges go away.

The main reason this happens is because the cardholder is confused about the charge and how to cancel it. Since free trial offers may last for a month or longer, it’s often the case that the cardholder simply forgets that they signed up for a trial offer in the first place. Alternately, they remember signing up but didn’t read the fine print and weren’t expecting their chard to be charged. Sometimes they know exactly what they signed up for and when it was going to start charging them, but they end up in a chargeback situation because they can’t figure out how to cancel the subscription with the merchant.

Subscriptions for recurring deliveries of physical goods (meal preparation kits, makeup, supplements, and the like) tend to be more susceptible to these chargebacks than subscriptions for digital services. The reason for this might be that digital subscriptions are more likely to be used immediately and frequently, whereas “subscription boxes” are more likely to show up once a month, with plenty of time for them to be forgotten in between deliveries.

On the banking side, the lack of a means of consistently identifying and tracking subscription charges can lead to issuing banks failing to recognize these charges for what they are when a customer calls to dispute them. When banks can identify them more easily, they can dissuade customers from entering into improper disputes. Currently, the lack of consistent identifiers means that subscription chargebacks can end up getting assigned inaccurate reason codes like “Fraud” or “Goods/Services Not Received,” making it all the more difficult to resolve them correctly.

How Will Visa’s New Mandate Fix These Problems?

Visa’s intention is to address these issues in a way that causes minimal friction for shoppers and does not impose too much additional labor requirements on merchants, banks, and payment processors. Based on feedback from issuing banks and other stakeholders, they determined that the most important elements in a solution would be as follows:

  • Cardholder recognition. Customers need to be able to easily recognize what a charge is and where it came from.
  • Easy cancellation. Recognizing a charge does customers little good if they have no easy way to cancel it on their own. Without easy, accessible cancellation methods, they will always resort to bank disputes.
  • Clear and specific dispute rights. Issuers have asked for better guidelines around disputes related to subscription charges in order to avoid confusing and contentious situations involving incorrect reason codes.

With these key points in mind, these are the changes going into effect on April 18, 2020:

Enhanced disclosures. Whenever a merchant enrolls a customer in a trial subscription, they must provide the following:
  • A digital receipt, even if no payment is due yet, that discloses terms and conditions, the amount and frequency of future payment obligations, and a link to a cancellation page.
  • An email or text message containing a link to a cancellation page, to be sent at least 7 days before processing the first actual transaction that occurs after the end of the trial period.
  • Language in the merchant descriptor that appears on the cardholder’s bank statement identifying the transactions related to the trial subscription.
Easier cancellations.
The merchant must provide customers with a simple way to cancel their subscriptions over the internet, even if the customer signed up for the trial offer over the phone or in person.

Clearer disputes

  • For cardholders, dispute rights are expanded in cases where they were not clearly advised about future billings.
  • For merchants, proof of adequate disclosure, cardholder acceptance, and subsequent notifications will be accepted as compelling evidence in representments.

Ongoing monitoring
Visa will be monitoring merchants for compliance with the new mandate.


Don’t let “monitoring for compliance” scare you—Visa has designed these changes to be minimally disruptive to merchant activities, and they’re not sending the credit card police to take your POS terminals away if you overlook something. Visa has assured merchants that if they’re having trouble implementing these changes, they should reach out for help developing a plan to get compliant within a reasonable timeframe.

Card network mandates are always a little intimidating, especially if you’re a small and perpetually overworked merchant, but they changes they bring usually benefit merchants considerably, helping to improve customer experiences and eliminate possible sources of disputes.

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