Are You Affected by Mastercard’s New Free Trial Rules?

February 6, 2019 · 4 min read

Last month, Mastercard made an announcement that left many subscription business owners wondering if their business would be affected — or to what extent. They later updated the announcement to clarify some of the rules, specifically around digital products, but in case you missed that or still aren’t sure whether it would affect your business, read on to find out what’s what.

The details of the new requirements:

Mastercard rolled out new consumer protections that apply to subscription businesses with free trials for physical products. In other words, if your subscription business only delivers digital products, these protections don’t apply to you. That said, it’s still worth paying attention to them and what they could mean for the future of the industry.

Mastercard’s new rules require merchants to do the following to ensure their customer’s conversion from free trial to subscriber remains valid:

  • Send the cardholder – either by email or text – the transaction amount, payment date, and merchant name along with explicit instructions on how to cancel a trial.
  • Send a receipt to the cardholder for each transaction by email or text message, with clear instructions on how to cancel the service if the customer so desires.
  • The merchant website URL or the phone number of the store where the cardholder made the purchase must be included on all charges that appear on the cardholder’s statement

If a merchant doesn’t follow these guidelines, customers can dispute the charges. These changes reflect best subscription practices, which can help reduce chargebacks and negative reviews, while protecting the customer trust you’ve worked hard to create.

What this means for you:

The big question is, what kind of product do you offer? If it’s a subscription in beauty products, records, scotch, or anything else that’s a physical product, you need to make sure you’ve implemented the new guidelines, or your Mastercard chargebacks will likely increase.

However, even if you sell digital products, this is a good time to examine how you’re charging and onboarding new customers. After all, these rules could be part of a sea change that may eventually affect digital products.

In other words, it’s time to take a look at your free trial and customer onboarding practices with an eye on the following:

  • Understanding your customer’s needs and experiences. How can you deliver the information about your product and how to use it when they need it? Will learning how to use it take a few minutes, or a few hours, or longer?
  • Optimizing customer time to proof of value. “Proof of value” is the moment your customer experiences how your product is going to save them time, energy, or money. In other words, it’s when they see what makes your product worth paying for. Ideally, this amount of time should be as small as possible, making it more likely for customers to stick around.
  • The timing of your post-signup emails. Business-owners often set email timing based based on hours or days after signup. But it might make more sense to time them with concrete onboarding milestones. Your goal should be to get the customer to “proof of value” ASAP, while ensuring they stick around long enough after that to turn product-usage into a habit.

The way you’ve set up your free trial should take all of this into account, especially points one and two. That’s one reason that Rebilly offers complete customization on how long your free trials can be — so you can match it to how long the onboarding process, and time to proof of value, takes for your product. We also offer dynamic descriptors, which make it easy to change what shows up on your customer’s credit card statements, in case you need or want to add your website URL or phone number.

Want to learn about other ways to decrease your chargebacks, and all of the associated costs? Download our guide to reducing chargebacks today:

Reducing Chargebacks

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