By Melody Lashmar - Visa requirements regarding high-risk transactions and this affects you!
I constantly hear that one of the benefits to working with an IPSP is that you can cross sell with other sponsored merchants. As this was never the intent of VISA they have revised their Operating Regulations to make it explicitly clear what constitutes a cross-sell/up-sell and what has to happen on this type of transaction.
Effective June 1, 2011 an Up-selling Merchant is defined as “a Merchant that offers a Cardholder goods and/or services online through the initial Merchant, but is not the initial Merchant, a subsidiary or affiliate of the initial Merchant with whom the Cardholder initiated the Transaction”.
One could still argue that in an IPSP situation the IPSP is the Merchant and the sponsored merchants (being the site owners) still fall under that umbrella of the Initial Merchant. That sounds like a good argument but then why is an IPSP required by Visa to differentiate the descriptor by sponsored merchant? And why would a consumer be treated two different ways when Visa is looking to protect the consumer. I’ll let you ponder those questions.
To be sure you understand the requirements according to Visa, here is the exact language from the rules regarding the up-selling requirements.
Up-Selling Merchant Requirements
Effective 1 June 2011, an Up-Selling Merchant must comply with all of the following:
- Clearly disclose to the Cardholder all of the following:
- The name of the Up-Selling Merchant offering the goods and/or services, in a manner that clearly differentiates the Up-Selling Merchant from the initial Merchant
- A description of the goods and/or services being offered
- The length of the trial period, if offered, including clear disclosure that the Cardholder will be charged unless the Cardholder takes steps to cancel the subsequent Transaction
- The Transaction amount and Transaction Date for the goods and/or services purchased
- The cancellation policy for all goods and/or services being offered
- Obtain an Authorization for the initial Transaction and any subsequent Transactions, as specified in “Recurring Transaction Processing”
- Obtain express informed consent from the Cardholder for the subsequent Transactions by requiring the Cardholder to undertake all of the following:
- Enter their personal Account Number for the subsequent Transaction
- Enter the name and address and contact details of the Cardholder
- Perform an additional affirmative action, such as clicking a confirmation button or other authentication, as permitted by local applicable law, to indicate Cardholder consent for participation in the Transaction
Based on the language above, it can be deduced that if a consumer is being charged for more than one service by more than one merchant (not merchant account) that the customer will have to re-enter their information and provide explicit consent as described above. If you are currently leveraging this benefit of using an IPSP, it might behoove you to specifically ask your IPSP what their position is on this new regulation, and that they indemnify you from any fines from Visa for cross/up-selling or deceptive marketing practices.
Even if you are not currently leveraging cross-sells or up-sells, I suggest that you evaluate your payment set up and understand your risks associated with it. As you understand your exposure, consider the elements of your payment set up that would associate you to these types of transactions. In particular your customer service toll-free number, your descriptor, your customer service e-mail address and even your cancellation webpage. If these items are not unique to you, then any investigations being conducted on other merchants could bring your activities into the spotlight. Last I checked, it is never good to be in Visa’s spotlight.
