My Take: Mastercard Now Requires Merchants To Get Approval For Charges After Free Trial

In a bit of good news and possibly the lead off for other processors to follow. Mastercard will now require companies to get confirmation of continued charges after a free trial ends. This is a great consumer move that benefits Mastercard in the end to ease the headache of requesting refunds and fraud charge complaints.

In a statement Mastercard says:

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.

For each payment thereafter, the merchant will have to send a receipt to the cardholder for each transaction by email or text message with clear instructions on how to cancel the service if the consumer so desires.  In addition, all charges that appear on the cardholder’s statement must now include the merchant website URL or the phone number of the store where the cardholder made the purchase.

While this sounds great it doesn’t cover a large amount of free trial purchases. In a statement that followed up the original announcement Mastercard clarified that only those who purchase physical goods (like beauty products) will be only be eligible. Digital goods will be exempt and run as like they have today after the change goes into effect. 

My Take 

While this move is great for consumers I don’t think it addresses a very large section of free trials, digital goods. I believe there to be a larger complaint about digital subscriptions that start as free trials and go into charging you to be a larger predatory network and if someone isn’t keen on their bills might be paying monthly for something that they shouldn’t have to be. 

I see way too many horror stories of signing up for free trials, not looking at the full charges after the trial ends and ends up getting charged hundreds of dollars as soon as the trial ends. To truly be effective at what Mastercard is doing, they need to work on extending their consumer protections to digital goods. 

What’s your take on this move? Should digital goods be covered too?