Over the last few years, the credit card industry has adopted new rules that make it tough for small companies to stay in compliance. Including for recurring payments charged by security alarm companies.
IF your company accepts Visa and Master Card for recurring subscription invoices, please review your processes versus the list below. Does your company provide:
If you answered NO to any of the above, you are out of compliance and your merchant account could be in jeopardy.
Why So Difficult?
A desire to protect the consumer is likely behind these added rules related to recurring transactions. The result? It’s nearly impossible for small security companies to keep up with this myriad of credit card rules.
But help is available. As a provider of customer management software, including processing of recurring transactions, Cornerstone has built in features to stay compliant. We invest in compliance, so our security dealers don’t have to.
Below are the relatively new rules we shared with our customers. and an explanation of how Cornerstone’s system helps them comply. You’ll also see our detailed recommendations to help customers stay compliant.
Rule: Electronic Receipt
Details: After each billing for the subscription or autopay enrollment, merchants must send a receipt/confirmation of the billing by email or any other electronic method. In addition to the transaction details, this receipt must include clear instructions on how the consumer can cancel the subscription.
Cornerstone Update: Credit Card (CC) autopay customers will require email on file, and be set to receive an email copy of invoice. If no customer email is available when setting up a recurring charge on CC autopay, we will use the default reply-to email in your company setup.
What customers need to do: Include language in your contracts detailing the price, frequency, and acceptance of terms.
Rule: Subscription Terms
Details: Prior to enrolling consumers in a subscription, merchants must, at the point of payment, disclose the subscription terms (MUST include price & frequency) and obtain the customer’s affirmative acceptance of the terms.
Cornerstone Update: None, as the current autopay authorization via Alarmpayments.com includes this information in the confirmation email.
What customers need to do: Include language in your contracts detailing the price, frequency, and acceptance of terms.
Rule: Online or Electronic Cancellation Method
Details: Merchants must provide an online or electronic cancellation method to subscribers. This method should be “similar to unsubscribing from email messages or any other electronic method.”
Cornerstone Update: Added an option on Alarmpayments.com to select “remove autopayment authorization.” This option will only be allowed if the customer has a CC on file.
Please keep in mind that customers are NOT canceling the service, they are only revoking their authorization for automatic charges to their card. A support note will be created for accounts removing authorization.
What customers need to do: You may wish to follow up with customers who revoke authorization to understand why.
Rule: Advance Notice for 6+ Month Services
Details: Merchants offering subscription plans with six months or more between billing dates must provide a notification containing the basic terms of the subscription and instructions on how to cancel the subscription prior to each billing date; applies to semi-annual and annual customers.
Cornerstone Update: Added a utility that runs each month to email customers on semi-annual or annual cycles with a billing method of Mastercard or Visa. This notice informs them of their upcoming autopay payment and states they can go to Alarmpayments.com to update or remove the autopay on file. The Cornerstone team will run this utility; does not need to be done by your team.
What customers need to do: Follow up with any applicable customers who do NOT have an email on file (Cornerstone will provide a list).
Rule: Electronic Confirmation of Enrollment
Details: Immediately following enrollment, merchants will need to send a confirmation of the consumer’s enrollment by email or any other electronic method. This confirmation must include the terms of the subscription (including the terms of a trial, if applicable) and clear instructions on how the consumer can cancel the subscription.
Cornerstone Update: Added verbiage to the current email confirmation stating they can go to Alarmpayments.com to update or remove the CC on file.
While these new rules and rule changes make it very difficult for small companies to comply, working with a professional recurring services processor like Cornerstone solves the problem!