Here is an overview of the updated Mastercard merchant standards for subscription billing merchants that came into effect September 22, 2022. These apply to recurring payment transactions/subscription billing for the delivery of physical products or digital goods, but do not apply to payments for utilities, telecommunications, insurance policies, or existing debt.
1.) Merchants must disclose the subscription terms at the same time they ask for card credentials. This disclosure must include the price that will be billed and the frequency of the billing. For example, “You will be billed $13.95 USD per month until you cancel your subscription.” Merchants using 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 $5.99 USD today for a 30-day trial. Once the trial ends, you will be billed $10.99 USD each month until you cancel.”
Along with the above, e-commerce merchants must also:
- Clearly and prominently display the subscription terms on any payment and order summary webpages
- Capture the cardholder’s acceptance of the subscription terms before completing the subscription order.
Giving a link to another webpage or requiring the cardholder to scroll down the webpage or make a message box bigger to see the subscription terms isn’t acceptable and doesn’t satisfy this requirement.
2.) Immediately after the cardholder completes their subscription order, the merchant must promptly send a subscription order confirmation to the cardholder through an email message or other electronic communication method that includes the subscription terms. This confirmation message must include or give access to instructions on how to manage the account, including instructions on how to cancel the subscription, which withdraws permission for any future recurring payments.
3.) With each approved authorization request, it’s recommended that the merchant provides the cardholder with a transaction receipt through an email message or other electronic communication method that includes the amount and reason for the billing and includes or gives access to instructions on how the cardholder can manage their account, including instructions for canceling the subscription and withdrawing permission for any further recurring payments. Cardholders may choose to opt-out of receiving these notices if desired.
The above OPTIONAL standard become a requirement the merchant MUST follow if they their recurring payment plan is identified for four months or more in the Acquirer Chargeback Monitoring Program (ACMP) as an Excessive Chargeback Merchant (ECM), a High Excessive Chargeback Merchant (HECM) and/or an Excessive Fraud Merchant (EFM) within the same period. If a merchant in the ACMP doesn’t follow the requirements, they may be subject to Category A assessments for each month they don’t follow the requirement. The merchant may also have to pay other assessments as part of the ACMP.
4.) Merchants must also provide an online or electronic cancellation method —similar to unsubscribing from email messages or any other electronic method — or clear instructions on how to cancel that are easily accessible online, such a “Manage Subscription” or “Cancel Subscription” link on the merchant’s home page.
5.) For subscriptions with billing that occurs less frequently than every six months (180 days) or less (such as one every six months, once every year, once every other year etc.), merchants must send an electronic reminder to the cardholder at least seven days — but no more than 30 days — before the next billing date. This reminder must include the subscription terms and must include or provide access to instructions on how to manage the account, including instructions on how to cancel the subscription/withdraw permission for any further recurring payments. The subject line of this message must clearly say that it relates to upcoming charges to the cardholder, using language such as “Important Information About Upcoming Charges to Your Account.” The message must also be clearly different from any marketing communications normally sent to the cardholder.
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Do you have questions about the updated Mastercard merchant standards? Reach out to your Client Success Manager for help or contact support.