Recurring Billing Requirements – Learn Visa & MasterCard’s New Rules


Recurring or Subscription Payments allow you to setup a product and charge a monthly price for it. You might setup a product that you charge $10.00 every month until your customer cancels if they choose.

This type of product is a great way to grow your business if you have a product or service that lends itself to being consumed continually. It is just as easy (or hard) to sell your customer a 1 time product as it is to sell them a product that they pay for each month. The difference is that when you sell a Recurring Billing software product every new sale you get each month is added to all the sales from previous months so that your monthly revenue just keeps growing.

The most important thing you must think about when you decide to offer a recurring product is the new requirements that Visa & MasterCard have put in place to protect consumers.

First you can not use forced continuity. Forced Continuity is where you sell or give away a product and then automatically sign up the customer for your recurring product. In this scenario you do not give the new customer a chance to “opt-out” of purchasing the recurring product — thereby forcing them to buy your continuity program. If you use this practice you could loose your merchant account and not be able to take any orders. The bottom line is do not use forced continuity.

Secondly, anyone who sells a recurring billing product must have a new customer agree to a “Terms of Service” (TOS). In the TOS it must clearly and easily spell out how much a person will be charged and how often. If you have different products selling at different price points you will need to list those in your TOS or have different TOSs for each product. The best online shopping carts will not only have the ability to have your customer agree to 1 or multiple TOSs. It will also keep a record of the exact TOS that each customer agreed to so that you can prove to your merchant account exactly what your customer agreed to when they signed up for your product.

There are many types of products you can sell that would be valuable as a recurring product. You might have a software service that they use each month. You might have a regular service that your customer uses each month like payroll processing. You might want to offer coaching or training. Monthly newsletters are outstanding recurring billing products that sell well. Think outside the box and see if you can find a way to offer a recurring product. If you do, it will be one of the best decisions you have made to increase your revenue.



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