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 lasting longer than seven days

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

• Subscription merchants

  • Excludes payments for utilities (such as energy, heating oil, water and sanitation), 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 on Stripe by default. Merchants can maintain compliance for notifications by ensuring that their selected payment reminders fall within the required time frames. To maintain overall compliance, follow the guidelines below

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

1. Toggle on "Send a reminder email seven days before a free trial ends" in the "manage free trial messaging" section

2. Toggle on "Email finalised invoices to customers" in the "manage invoices sent to customer" section

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 seven days before a subscription ends in the "Manage ending subscriptions" section

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 that it redirects to a page that clearly states the cancellation instructions

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

Specifics of regulations

Subscriptions

As of 22 September 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 is processed six 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 either by 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

As of 22 September 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 the 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 it is not cancelled by the cardholder.

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

  • This does not apply to free trials lasting seven days or less