Mastercard Announces New Rules for Free Trials and Subscriptions
January 2019 saw MasterCard announce new guidelines relating to free trials. The credit-card issuer now requires merchants who sell physical products, following a free trial period, to adhere to a new set of rules, designed to create transparency and avoid complaints. Are you up to date on the latest guidelines from Mastercard?
Free trials are becoming an increasingly prevalent way of introducing products to consumers, and in many cases they can be a great way for consumers to try an item before making a decision on whether or not to make a purchase or continue with a subscription. However, in some cases, consumers may be unaware that their free trial will automatically lead to a paid subscription unless they cancel. Likewise, there have been cases of consumers forgetting that their trial period has finished and being disappointed to find that they have been charged for a product they did not intend to purchase.
MasterCard has now stepped in to assist both merchants and consumers, with a set of standards regarding trial subscriptions for physical products. As part of the regulations, merchants will now need to notify a consumer when their trial period ends, and let them know exactly when they will be charged, and how much that bill will be. In addition, merchants will need to give consumers clear advice on how to cancel their membership, should they wish to do so.
This initial communication isn’t all merchants will be required to provide, either. MasterCard will now also be requiring merchants to let consumers know every time they’ve been billed for their subscription, with clear information on the amount they have been billed, and the date on which this bill occurred. Every message will also need to reiterate the cancellation procedure, so consumers are never in the dark about what they need to do if they’d like to halt these regular bills.
Many industries need to take note of these new regulations, but we expect that those trading in the nutraceutical and health sectors will be most affected. These are industries that rely largely on free trial models in order to tempt consumers into trying new products, by showing off the advantages of supplements and health products first hand.
The 2019 regulations set out by MasterCard will not end the prevalence of free trials in this sector or any other, but they will give consumers more opportunities to back out of purchasing memberships and subscriptions. And that could have a negative effect on those all-important margins, in a number of different sectors.
In order to ensure the ongoing success of their businesses, it’s crucial that companies operating free trials and subscriptions for physical products stay ahead of the game.
If that sounds like you, make sure you know exactly what the regulations are, and how you can implement them. Keep things clear for your consumers, and focus on building trust in your brand. By doing so, you’ll ensure that your customers keep coming back to you for the products they know and love. And they just might tell their friends about your brand, too.