opinion

Major Card Brands Roll Out New Changes

Major Card Brands Roll Out New Changes

Visa and Mastercard are shuffling the deck in 2019, impacting the way business is done in the world of payments. Starting this month, Mastercard is requiring more transparency for free trials associated with physical products such as skin care or other healthcare items and recently Visa announced lower chargeback thresholds, to take effect this coming October. Both initiatives focus on reducing chargebacks, a goal we can all get behind. So, rather than panic over the changes, take a closer look and you’ll realize the odds are stacked in your favor.

Our company recently underwent a Mastercard Global Risk Review and gained some insight on the card brand’s new rule governing free trials. Mastercard says it rolled out the rule to go after deceptive practices specifically around physical goods in the health and “nutra” space.

While rules are getting stricter, the tools we can use to fight chargebacks are stronger than ever.

Starting this month, merchants offering these types of products will be required to notify a consumer, either by email or text message, when a free trial period ends and when a regular subscription is about to begin billing. The notification must include: the amount to be billed, the payment date, the merchant name and detailed instructions on how to cancel. Also, before automatic billing can begin, the merchant must obtain the cardholder’s explicit approval. While free trial offers are helpful in increasing sales and improving customer satisfaction, the changes will help increase transparency and eliminate disputes from cardholders who weren’t clear about what they were buying.

While the rule applies to physical goods only, it is certainly possible it could extend to the digital space in the future. So, let’s make sure Mastercard doesn’t have reason to do that. It’s on us to keep the digital space as clean and as transparent as possible. For now, only Mastercard is implementing this rule but it’s a safe bet that Visa could follow. In the long run, increased transparency is a win-win for everyone: great for consumer protection while reducing chargebacks.

Speaking of chargebacks, Visa is about to get stricter. Starting Oct. 1, allowable sales-to-chargeback ratios will be lowered under Visa’s Chargeback Monitoring Program (VCMP) and Acquirer Monitoring Program (VAMP). Both are compliance efforts that help merchants and acquiring banks keep dispute and fraud activity to a minimum. Here’s how it breaks down; the VCMP applies to merchants and currently allows for 100 chargebacks per month — this will stay the same, but the maximum sales-to-chargebacks ratio drops from one percent to 0.9 percent. The VAMP, which applies to acquiring bank portfolios, currently allows for 750 total chargebacks per month. This will also stay the same, but the maximum sales-to-chargeback ratio falls from one percent to 0.75 percent.

While rules are getting stricter, the tools we can use to fight chargebacks are stronger than ever. Visa is rolling out its Visa Merchant Purchase Inquiry (VMPI), which gives merchants the ability to respond to cardholder inquiries around unrecognized transactions and other potential disputes by providing relevant supplemental merchant information in real time. This will allow processors supporting VMPI to respond to a bank inquiry almost immediately, ensuring it does not become a chargeback.

Another tool in the fight against chargebacks is 3-D Secure. Our own merchants already benefit from 3-D Secure, and later this year we’ll begin supporting version 2.0. The latest version enables a real-time, secure, information-sharing pipeline that merchants can use to send an unprecedented number of transaction attributes that an issuer can use to authenticate customers more accurately, without asking for a static password or slowing down ecommerce.

That the bar continues to be raised when it comes to allowable chargebacks is a testament to how far we’ve come in the payments industry over the last 20 years. When I started in this business, the allowable chargeback ratio was five percent. In recent years, it has steadily been brought down to two percent and then ultimately to one percent globally as of January 2016. All these changes and compliance efforts benefit both merchants and acquirers by keeping dispute and fraud activity down to a minimum.

Cathy Beardsley is President and CEO of Segpay, a global leader in merchant services offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of only four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are always safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact compliance@segpay

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

profile

WIA Profile: Lexi Morin

Lexi Morin’s journey into the adult industry began with a Craigslist ad and a leap of faith. In 2011, fresh-faced and ambitious, she was scrolling through job ads on Craigslist when she stumbled upon a listing for an assistant makeup artist.

Women In Adult ·
profile

Still Rocking: The Hun Celebrates 30 Years in the Game

In the ever-changing landscape of adult entertainment, The Hun’s Yellow Pages stands out for its endurance. As one of the internet’s original fixtures, literally nearly as old as the web itself, The Hun has functioned as a living archive for online adult content, quietly maintaining its relevance with an interface that feels more nostalgic than flashy.

Jackie Backman ·
opinion

Digital Desires: AI's Emerging Role in Adult Entertainment

The adult industry has always been ahead of the curve when it comes to embracing new technology. From the early days of dial-up internet and grainy video clips to today’s polished social media platforms and streaming services, our industry has never been afraid to innovate. But now, artificial intelligence (AI) is shaking things up in ways that are exciting but also daunting.

Steve Lightspeed ·
opinion

More Than Money: Why Donating Time Matters for Nonprofits

The adult industry faces constant legal battles, societal stigma and workplace challenges. Fortunately, a number of nonprofit organizations work tirelessly to protect the rights and well-being of adult performers, producers and industry workers. When folks in the industry think about supporting these groups, donating money is naturally the first solution that comes to mind.

Corey D. Silverstein ·
opinion

Consent Guardrails: How to Protect Your Content Platform

The adult industry takes a strong and definite stance against the creation or publication of nonconsensual materials. Adult industry creators, producers, processors, banks and hosts all share a vested interest in ensuring that the recording and publication of sexually explicit content is supported by informed consent.

Lawrence G. Walters ·
opinion

Payment Systems: Facilitator vs. Gateway Explained

Understanding and selecting the right payment platform can be confusing for anyone. Recently, Segpay launched its payment gateway. Since then, we’ve received numerous questions about the difference between a payment facilitator and a payment gateway. Most merchants want to know which type of platform best meets their business needs.

Cathy Beardsley ·
opinion

Reinventing Intimacy: A Look at AI's Implications for Adult Platforms

The adult industry has long revolved around delivering pleasure and entertainment, but now it’s moving into new territory: intimacy, connection and emotional fulfillment. And AI companions are at the forefront of that shift.

Daniel Keating ·
profile

WIA: Sara Edwards on Evolving Clip Culture and Creator Empowerment

Though she works behind the scenes, Sara Edwards has had a front-row seat to the evolution of adult content creation. Having been immersed in the sector since 1995, she has a unique perspective on the industry.

Jackie Backman ·
profile

Segpay Marks 20 Years of High-Risk Triumphs

Payment processors are behind-the-scenes players in the world of ecommerce, yet their role is critical. Ensuring secure, seamless transactions while navigating a rapidly changing regulatory landscape requires both technological expertise and business acumen.

Jackie Backman ·
opinion

The SCREEN Test: How to Prepare for Federal Age Verification

For those who are counting, there are now 20 enacted state laws in the United States requiring age verification for viewing online adult content, plus numerous proposed laws in the works. This ongoing barrage has been exhausting for many in the adult industry — and it may be about to escalate in the form of a potential new AV law, this time at the federal level.

Corey D. Silverstein ·
Show More