How Nutra Merchants are Adjusting to the Mastercard Free Trial Rules

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PayDiverse sees nutraceutical merchants moving towards straight sale business models.

A recent change in Mastercard's terms and conditions has caused big changes for the nutraceuticals industry. The terms and conditions surrounding the free trials that many merchants in the industry have long relied upon to attract new clientele have changed. In addition to charging higher processing fees to merchants that offer free trials, Mastercard is no longer allowing merchants to automatically bill customers at the end of a free trial without first contacting customers in writing to remind them of the charge.

This rule change has come about as the result of poor marketing practices that are all too common in the industry. Merchants that offer free trials without making it explicitly clear to their customers that their card will be billed at the end of the trial have caused high numbers of Mastercard chargebacks and customer complaints. As a result, Mastercard's merchant terms and conditions are evolving to protect both the best interests of its cardholders and its financial wellbeing.

The new rules don't forbid nutraceutical merchants from offering free trials of their product to new customers, but they do change the way merchants are allowed to use the customer's information. In the past, merchants were able to obtain payment authorization when a new customer signed up for a free trial. Once the trial expired, the merchant could legally begin processing payments without notice. Although legal, this practice is widely considered unethical, as merchants often don't clearly state billing terms or provide a reminder prior to charging the customer's card.

Under Mastercard's new free trial rules, nutraceutical merchants who choose to continue offering free trials to their new customers are required to send written notice via email or text message to the customer. The notice must contain the following details:

  • Merchant name
  • Product or service the customer is being billed for
  • Transaction amount
  • Date payment(s) will be processed
  • Explicit instructions on how to cancel the billing

Mastercard has also increased processing fees for merchants who operate within the nutraceutical industry because of the high risk that's been created by these poor marketing tactics. These new rules and increased fees are making it more difficult for nutraceutical merchants who operate using a free trial model to obtain processing accounts. As a result, many nutraceutical merchants have chosen to strictly bill their clients using straight sale or continuity billing models.

Nutraceutical merchants who require a new payment processing account may have difficulty finding banks that are willing to work with them. Third-party merchant services companies such as PayDiverse are typically the best option in such a situation. These companies are generally more willing to take on high-risk merchants and, in most cases, working with them comes with a wide range of extra benefits that are designed to protect high risk nutraceutical merchants against account problems such as fraud, chargebacks and termination. Since the rule took effect, PayDiverse has seen an uptick in their nutraceutical merchants removing free trial offers altogether.

PayDiverse offers nutraceutical merchants the opportunity to process Mastercard payments, as well as other major credit and debit card payments, regardless of whether or not the merchant offers its customers a free trial. The company's merchant accounts include fraud and chargeback protection, as well as a long list of additional services. PayDiverse has 15 banking solutions that are willing to work with high-risk nutraceutical merchants and offers competitive processing rates.

To learn more about PayDiverse, nutraceutical merchants should contact PayDiverse online by visiting or by telephone at (855) 467-2325.

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Alex Stewart
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