While credit card access makes the world of commerce go round, many customers find themselves saddled with expensive subscription programs they never intended to participate in long-term. To reduce this risk, MasterCard has begun targeting negative options. Negative option billing is providing goods or services for a recurring payment, and will be continuously paid until the subscription is canceled.
For merchants hoping to sell subscriptions for regular deliveries, the negative option method of payment collection has long been very effective. Consumers sign up for a particular product line, and if they don’t opt out of a specific delivery window, the products are shipped. The default is that the person has opted in for the purchase.
MasterCard has found that this method of selling has locked some consumers into debt they never intended to take on. Merchant services providers will need to make sure their merchants are made aware of some of these new rules. Merchants will now be required to notify the customer that their free trial is ending. They will not be allowed to charge the customer without doing so.
MasterCard Will Be A New Hurdle
Moving forward, before a consumer’s MasterCard can be charged, the consumer will need to confirm with the credit card company that they have opted into the subscription. This provides the consumer with one more check for their product subscription prior to the first charge being placed.
After the free trial period ends, the negative option merchant must obtain the following information and have an agreement from the customer before charging them.
- The amount of the transaction
- The name of the customer as it appears on their credit card
- The date the payment is due
- The terms and agreements detailing the steps for canceling the subscription
Merchant services providers will need to register negative option merchants with the MasterCard Registration Program, so they can have access to account data. Possible high-risk negative option providers will need to be screened for registration to the MRP system.
Relationships Are Key
If your customers work directly with your company via a subscription series, there may be some disruption as MasterCard attempts to confirm the validity of new subscription programs. Merchant services providers will need to be ready to help the valid sellers jump the hurdle put up by MasterCard to confirm that your service is truly one the customer wants to stick with.