Important: The following new rules by Visa are mandatory for recurring payments starting April 18th, 2015, please make sure to comply by then.

 

Do you run a subscription business and want to build trust with your customers while reducing the amount of chargebacks you receive?

By selling products or services that are paid for regularly (e.g. on a monthly basis), you and your customers enter, what Visa calls, a recurring transaction agreement (RTA). An RTA is a token of trust between you and your customer, which is why it is that important to convey this trust to him by being transparent about your services.

Visa has set up new rules that will become active on April 18th and we will help you do just that. How do they help? By following these new rules, your customers will know exactly what to expect from subscribing to your service. No unpleasant surprises for your customers, less chargeback costs for you.

How should I enter an RTA with my customer?

At the time of checkout, it is vital to ask for your customer’s consent to the exact terms of your subscription service. Save this consent as you may need to provide it upon request of the card issuer in the future.

Here’s what your customer should confirm during checkout:

  1. The exact amount of the recurring transaction
  2. Whether the amount is fixed or variable
  3. The exact date of the transaction
  4. Whether the date is fixed or variable
  5. A method of communication (e.g. email) that will be the direct channel between you and your customer.

Since these details are very specific to the plan that your customer signs up to, writing a generic description to your terms & conditions will probably not be enough to cover them all. Instead, you should add the individual plan setup directly to your checkout – providing maximal transparency!

It goes without saying that you must not proceed with an RTA, if your customer does not confirm or if you initially receive a non-approval response from your payment processor (i.e. the first transaction or card authorisation fails).

How should I confirm an RTA to my customer?

Once the RTA is active and running, the last thing missing before letting your customer enjoy his subscription experience is a confirmation of all the terms, he has agreed to. The medium to do so should be the specified method of communication (e.g. email) that was agreed to during checkout.

By using this medium, you will not only avoid misunderstandings, but will actually actively open the channel of communication between you and your customer.

What should I do while a subscription is running?

Once a subscription is running, the easiest way to keep your customers happy, is of course to provide the best service possible. There are however other ways to further increase trust and reduce chargebacks.

Here’s what Visa wants and recommends you to do:

  1. Give your customer the chance to cancel the subscription online (if he has entered it online).
  2. Notify him (7 days in advance) about upcoming changes (e.g. trial periods, promotional offers ending).
  3. Notify him (7 days in advance) about upcoming payments if the last payment lies more than 6 months in the past.

So that’s it. By implementing the answers to these questions, you will not only build a more trustful relationship with your customers but you’ll go an important step towards lower chargeback costs.

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Julian Ott

Julian is a product manager at PAYMILL with focus on subscriptions and recurring payments. Having a background in business and computer science he has worked as a developer, web designer and management consultant.