There’s nothing worse than getting automatically billed after a free trial is over, because nobody has time to remember to cancel.
With this in mind, Mastercard has announced a new policy to help its cardholders, ending the practice of automatic billing—unless merchants gain consent.
According to Paul Petta, Chief Franchise Officer at Mastercard:
We are introducing rules for merchants that offer free-trials to make this a hassle-free experience for their consumers. The rule change will require merchants to gain cardholder approval at the conclusion of the trial before they start billing. To help cardholders with that decision, merchants will be required to send the cardholder – either by email or text – the transaction amount, payment date, merchant name along with explicit instructions on how to cancel a trial.
Petta explains for subsequent payments, merchants will be required to send a receipt for each transaction digitally, with clear instructions on how to cancel.
Also, charges on a customer’s credit card statement will now require a merchant URL or phone number of where the purchase was made.
The company concludes, “These new rules from Mastercard will help increase transparency and ensure an outstanding experience for cardholders.”
Mastercard told iPhone in Canada in a statement the new rule will be “going into effect globally in April 2019.”
This is a good policy change by Mastercard, which looks to protect consumers and save the company money, as it will reduce customers from calling in to dispute automatic charges after free trials end. This means if you’re signing up for a free trial from any business come April, you can rest assured your Mastercard won’t be auto-billed.
Last week, Mastercard revamped their logo to now become a symbol brand, dropping their name from their iconic logo.
Update Jan. 17, 2019: Mastercard clarified to iPhone in Canada this policy change only applies to trial physical products, and not online services. This might be physical trials for cosmetics, skincare, healthcare or vitamin subscriptions, for example.
Mastercard clarifies the change for physical products only, “because historically they have seen most issues occur in this space. Online subscriptions traditionally are quite explicit and ask people to opt in.”