Background

Mastercard has announced new recurring payment rules that will affect recurring payments and negative billing merchants.

Affected customers

• Merchants that offer a free trial longer than 7 days

  • Excludes negative option billing merchants that offer a free or low-cost trial period of a physical good and then automatically enroll the cardholder into a recurring billing/subscription plan at the end of the trial period.

• Subscription merchants

  • Excludes payments for utilities (such as gas electric, sanitation, heating oil, water), telecommunications services, insurance policies, or existing debt (for example, vehicle loan or mortgage repayments).

Guide for Stripe billing users to be compliant with new Mastercard regulations

For the most part, requirements for explicitly stating subscription terms and receipts are already met by default on Stripe. Merchants can maintain compliance for notifications by ensuring their selected payment reminders are within the required time frames. To maintain compliance overall, follow the below guidelines

Configure the following in your billing and subscription settings if using the Stripe notifications:

1. Toggle 'send a reminder email 7 days before a free trial ends' on in the section 'manage free trial messaging'

2. Toggle 'email finalized invoices to customers' on in the section 'manage invoices sent to customer'

3. Create an upcoming renewal event between 7 and 30 days if you have subscriptions with a billing period longer than 180 days in 'prevent failed payments'

4. Create a subscription ending event for 7 days before a subscription ends in the section 'manage ending subscriptions'

5. Send notifications to all customers when the terms of your subscription or free trial offerings change

6. If needed, make changes to your 'manage subscription' email link to ensure it redirects to a page that clearly states cancellation instructions

If using custom notification integrations, please ensure that the notification timelines are within the required timeframes.

Specifics of regulations

Subscriptions

Starting September 22, 2022, anyone who charges recurring payments must provide:

• The full subscription terms at the time of subscription

• An email or other electronic message that includes:

  • The subscription terms

  • A transaction receipt

  • Clear instructions about how to cancel the subscription.

• An email or electronic payment reminder for any subscription that processes 6 or more months apart (such as an annual subscription)

• The Merchant must also provide the Cardholder with written confirmation in either hard copy or electronic format at least seven (7) days in advance when any of the following events occur:

  • The Cardholder’s trial period expires

  • The Merchant is revising the subscription billing terms

  • The recurring payment Transaction cycle has been terminated by either the Merchant or the Cardholder, in which case the notice must be sent no more than seven days after the Cardholder’s decision to cancel.

Free Trial and Negative Billing

Starting September 22, 2022, any merchant providing a free trial must provide:

• The full subscription terms at the time of subscription

• An email or other electronic message that includes:

  • The subscription terms

  • A transaction receipt

  • Clear instructions about how to cancel the subscription.

• Merchants must notify cardholder no less than three days, and no more than seven days, before the end of the trial period that the subscription plan will commence if the cardholder does not cancel.

  • This notification must include the basic terms of the subscription and instructions about how to cancel.

  • This does not apply to free trials 7 days long or less