The internet is littered with free trial offers. One thing these trials tend to have in common, is they ask the consumer for their credit card information. Once the trial ends, the consumer often forgets to cancel the subscription and is consequently automatically signed up for recurring billing.
The same can be said for offline commerce. Physical products, especially within the health and wellness industries, are often offered with supposedly no strings attached only to bait the user into a recurring payment scheme.
In all fairness, free trial offers can be highly beneficial to both consumers and business alike. However, in many cases, there is a lack of transparency that does more damage than good.
Unwanted payments cost money
Unwanted recurring payments are costly for both consumers and banks alike. The unsavoury practice, though generally accepted, often leads to payment disputes and costly chargebacks.
MasterCard recently announced a rule change that requires merchants to gain approval of cardholders at the of a trial period before billing can start. The move is aimed at protecting consumers as well as curbing costs at a time when shoppers have an ever-expanding range of banking alternatives to choose from.
No more mystery transactions
Moreover, merchants are now required to send a receipt after each payment. The receipt, specifying the merchant name and transaction details can be sent either by email or text message and inform the consumer of cancellation options. This way, consumers will always have control over how and where their money is spent.
Additionally, credit card statements are also required to include the merchant’s name a well as a web address or phone number. It’s a move that is sure to boost consumer confidence in both the payment method and the merchant’s business practices.
In 2018, Apple took a similar stance on deceptive free trials in apps. One requirement is users are now prompted to opt in for recurring subscriptions. Another is that the billable amount, referred to as the ‘true cost,’ must always be displayed prominently. Recently, Apple followed up by making it easier for iPhone users to manage their subscriptions from within the App Store.
Do you offer free trials for your products and services? Not sure whether you’re playing by the rules? Are you losing time and money as a result of disputes or chargebacks? Perhaps it’s time to speak with a payment consultant.
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