How to Prepare for the New Negative Option Billing Rules by Visa and Mastercard

The latest negative option billing rules introduced by VISA and Mastercard will ensure better communication and transparency. Merchants who want to accept VISA and Mastercard need to incorporate the new rules into their payment processing framework. 

Merchants offering increasingly popular subscription or free, trial-based services also must prepare for new and expanding VISA and Mastercard rules related to ‘negative option billing,’ the payment framework for these services.

The latest rules will apply to all merchants, including content platforms, e-commerce sites, and cam operators, providing subscription-based services with promotional offers, upsells, and free trials. 

So, what are these rules and how will they affect the payment system for subscription services? In this article, we will discuss negative option billing, rules, impact on merchants, and how leading payment processors can help with the updated rules.

The Controversy Behind Negative Option Billing

Negative option billing is a legal business practice. It has been in use since the book-of-the-month club offers from 40 years ago, when it was a fairly popular billing method. Unfortunately, in the e-commerce era, some merchants have abused the model, giving the practice a bad reputation.

Negative option billing engages consumers by offering a free trial or sample of a product or service and collecting payment card details to be billed at a later time. The contract allows customers to decline the subscription before the trial ends or continue to pay for the upcoming service.

More than 80% of consumers proceed with accepting the terms & conditions without adequately reviewing them. As expected, this can lead to disagreements and chargeback issues. For example, the customers typically find fault with contract fine print during checkout, while merchants must resolve disputes with users who fail to read the terms of the offer and continue with the service without canceling the subscription within the stipulated time. 

Visa and MasterCard Rules

The latest negative option billing rules introduced by financial giants VISA and Mastercard will ensure better communication and transparency over these automated payments. Merchants who want to accept VISA and Mastercard need to incorporate the new rules into their payment processing framework and work to minimize chargebacks. 

Wondering how all of this will work? 


VISA’s rules for negative option billing entered into force in 2020. The rules focus on consent and reminders to customers, providing for greater assurance to merchants that a customer is aware of their payment obligations.

  • Merchants must get evident approval from the customers to enter a subscription with recurring payments at the time of enrollment. Customer consent must be captured in a form pop-up message, “click to accept” on the checkout page, confirmation email, or via a signed consent form. 
  • After getting consent, merchants must provide transaction receipts via email or other electronic mediums, even if the purchase amount is $0. The message should include all of the subscription terms, free trial period, offers, and simple instructions on how to cancel the subscription.
  • Merchants must send a reminder to the customers seven days before the trial ends or an upcoming recurring transaction or billing period. In addition, they should provide simple and easy-to-understand cancellation methods to the customers via email, text message, online link, or phone call. In other words, give your customer options! 
  • In case of a free trial transaction, an additional billing descriptor must be shared with customers through email, text, or another medium, clearly mentioning the free trial and trial period.


VISA also ensures advanced monitoring of the chargeback disputes to create a better environment for dispute resolution between vendors and cardholders. This includes the proper exercise of consumers’ rights and merchants’ adherence to the updated regulations.


MasterCard rolls out significant changes in the existing subscription models or free trial rules. These rules are intended to align with EU, CA and US regulations, create fewer chargebacks from subscriptions, and provide a better cardholder experience. The changes will be in complete effect from September 2022 and focus on disclosures and notices to the consumer. 

  • Prior to signing up for the subscription, when card details are taken, the merchant must disclose all terms and conditions associated with it, including the price that will be charged, billing frequency, and future payments.
  • Merchants must disclose the terms of the free trials to the consumers at the time of enrollment on the checkout page, including the duration of the trial, the cost, and the frequency of the following subscription. The cardholder’s acceptance must be explicitly captured by checking a box. It will be a legal confirmation that subscribers agreed to the terms.
  • Notify customers via email or other electronic media, between 3 to 7 days before the trial ends, that they will be charged for the upcoming service if they do not cancel the subscription before the trial period ends. For subscriptions over 6 months or more, the merchants should inform customers of the upcoming charge between 7-30 days before the billing date. Also, merchants must clearly communicate how to cancel the subscription. 
  • After every bill, merchants must send receipts via email or other electronic media with transaction details, in addition to simple instructions on cancellation.
  • Merchants are required to provide their subscribers with easy and hassle-free online cancellation methods via email, merchant’s website, or other electronic medium. 


The negative option billing rules are undoubtedly a step toward a transparent advanced billing ecosystem that will help to address chargebacks, which are the major concern for both merchants and their customers. 

Staying on the Positive Side of Negative Option Billing

The latest rules reflect the rising trend of protecting consumers, while advocating fair business practices for merchants. A business can thrive in the market by following the essential regulations related to negative option billing. 

Here are some proactive steps to protect your business from chargebacks and comply with the latest rules:

Communicate the Offer with Clarity

Provide comprehensive and understandable disclosures to potential customers. Prominently display the cost of the product or service and all of the essential terms at checkout. The message should be clear and concise, leaving no shred of doubt in a customer’s mind. If you are authentic in your approach, the cloud of chargebacks will not follow you.

Obtain Explicit Consent

Having consent from the customer is the best way to ensure a credible transaction. After completion of payment processing, customers should receive a receipt via email, along with their sign of acceptance.

Provide Helpful Customer Service

Make every customer feel prioritized by offering reliable and prompt service. Provide a way to cancel online Offer a seamless refund in case of a misunderstanding and avoid being hit with a chargeback afterward.

The Bottom Line

The card industry primarily focuses on customer convenience and continuously develops guidelines based on market needs. The best strategy for continuing to offer negative option billing is to adhere to the latest rules and communicate clearly with consumers. 

For subscription businesses and offerings, compliance will help foster relationships and trust among customers. For merchants, negative option billing can be a good strategy to increase transaction rates and retain customers for longer. On the flip side, customers can utilize these services with complete reliance.


Need help to set up a payment processing system that complies with updated negative option billing rules from VISA and MasterCard? Vendo offers comprehensive payment processing services to high risk industries, including content platforms, cam operators, and e-commerce sites. Our innovative, AI-powered tools offer merchants simple, secure, and seamless payment solutions, along with expert customer support from integration to end-user concerns. Our expert team works 24/7 to shape your vision into reality. 

Connect with us to learn more about how Vendo can help transform your business.