Mastercard’s new policy on automatic payments after free trial is not applicable to online services

Recently, Mastercard had announced a new ruling for subscription-based providers especially those that offer free trial offers. According to their official blog post, Mastercard had mentioned “…we are introducing rules for merchants that offer free-trials to make this a hassle-free experience for their consumers. The rule change will require merchants to gain cardholder approval at the conclusion of the trial before they start billing.”

While most consumers would think of online services such as Netflix, Spotify or Apple Music, unfortunately, this new ruling does not cover such online services. Mastercard has issued a clarification and they have updated their blog post announcement to reflect this latest update.

Based on the latest info, the hassle-free-trial policy is only applicable for merchants selling physical products. Their blog post had given several examples such as skincare and healthcare items.

We have reached out to Mastercard’s PR team in Malaysia and they have also confirmed that the free-trial policy is also available in our market. However, it only covers physical products and not online subscription services.

When it comes to subscriptions, this free-trial protection for online makes more sense and it is easily overlooked compared to physical products. Sometimes, consumers may forget that they have subscribed to a service and you only realise it after spotting it on the card statement. Unlike a physical product, you’ll lose 100% of its value if you don’t use the service during the subscription period.

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Alexander Wong