High Risk Merchant Handbook

Getting a Subscription Merchant Account

Selling on a recurring plan comes with its own card network rules. Here is what the card networks require of subscription billing and how to prepare.

A subscription merchant account is a card account for a business that charges the same customer again and again on a set schedule. Online streaming services are one example. The account itself works like any other, but the billing does not. Recurring charges come with their own network rules.

Why acquirers watch subscription billing

Mastercard recommends that acquirers in the Europe Region perform checks on merchants doing recurring payment transactions. Its manual says these checks are meant to cut down on complaints about tricky subscription billing.

That is the worry in one line. Some sellers sign people up, charge them again and again, and make leaving hard. See why banks watch processor accounts to learn more.

What the card networks require of recurring transactions

Visa's rules say a recurring transaction must include the fixed dates or intervals on which the transactions will be processed. So the charge schedule must be part of the deal. Visa's rules also say a recurring charge does not need the card's expiration date.

Visa's rules call for a link or some other simple way for a cardholder to stop recurring transactions online or by text message. So give customers a cancel step that works online or by text.

Disclosure rules your checkout must meet

Visa's rules say merchants offering negative option transactions must disclose the merchant name and a description of the goods and services. The disclosure must say how long any trial, intro offer or promo period lasts. It must also show the amount and date of the first charge. It must show the amount and date of each later charge too.

Mastercard's manual says acquirers should verify payment pages correctly display the terms of the recurring payment without using small print. Put the full price and the cancel method on the checkout page in normal size type.

Free trials and negative option billing

Negative option billing means the customer buys if they say nothing. The trial ends and the charges start unless the customer acts. Visa's rules cover up-selling and negative option merchants in section 5.8.17. Visa's guide says sellers using free trials must follow Visa Rules on disclosing terms, getting cardholder consent, and offering a simple way to cancel. Visa's rules also have a table for negative option sales. It shows what you must put in your disclosures, receipts and notices.

Mastercard requires negative option billing merchants selling physical products with MCC 5968 to register. Its manual says the acquirer must tag every negative option charge that is not in person with MCC 5968 and TCC T. Mastercard's manual says a trial period is a set time for the customer to try the physical product.

Getting the MCC right

Visa's manual says merchants offering online streaming of digital media content on a subscription basis should use MCC 4899. Visa's manual says MCC 5968 merchants sell subscription products for delivery via direct mail, email, apps, or salespeople.

The code must match what you actually sell. Choosing a friendlier code to dodge a rule is miscoding, and it is the wrong move. If you are unsure which code fits, ask the acquirer before you apply.

Disputes and monitoring

Visa's rules name Dispute Condition 13.2 as the one for a recurring transaction the customer already cancelled. Mastercard's manual says the acquirer of a negative option billing merchant must monitor authorization transaction messages. So the acquirer watches your payment requests.

How to prepare your application

Give the acquirer a clean package before it asks twice. Write terms of service that state the charge schedule, the trial length and the cancel method in plain words. Make the checkout page show the same things at full size. Build a cancel flow that works online or by text, and test it yourself.

Do you sell subscriptions by phone? Extra rules cover how you get billing approval. See billing authorization on phone sales before you write your script.

A clean application does not mean you will be approved.

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