I have a question.

What procedures/best practice do most services that offer a "free" trial that converts to a payment use?
1. We offer a free trial and user inputs their credit card info
2. The user does not cancel
3. We charge the card

What is the recommended or best practice for ensuring payment and not upsetting the user/credit card holder who looks at their electronic statement and does not like to see anything out of the ordinary including pre-authorizations?

Thanks,
Victor

Welcome to the forums victorcab!

Make sure everything is spelling out, word for word on your Terms of service and then paraphrase it (very good) on the page they are entering their credit card information.

You will have some chargebacks of course because it is a membership site it seems and people will not read everything thoroughly.

You can also consider sending an email to them a few days prior stating their card will be charged starting on XX Mon, if they do not cancel. This will help some, but this also might hurt as well.

Thank you Corey.

I'm just wondering if there is a good way to ping the account for the amount of the service without having it show on the electronic statement.
Is this something that some merchant accounts facilitate?

I'm really looking for best practices.

Thank you.

Not really because if you do a pre-auth, the money is actually yours for a certain amount of time. I have seen that pre-auths have a tendency to show up more on debit cards with the Visa / Mastercard logo rather than a 'regular' credit card. On credit card (when viewing online), it might not show, but could / would affect the available balance

It seems it is more up to the issuing bank.

Like Corey said, it all depends on Issuing Bank. Well, not realy on the Bank itself but more likely on the way Online Banking interface was coded. For example i had experiences with different banks where some banks will only make avaible information about succesfull charges made. Some banks will show also pre auth or expired charges. PayPal with its Debit Card will show on the account overview page everything was has been done with the card, even unsuccesfull attempts to use the card online or at ATM's. I the other words there is no tool that will work on all cards same way to "ping" them.

Thanks. So as a merchant selling a subscription that rolls over from month to month and offers a free initial trial I am looking for a way to
1. verify the credit card is valid and make sure there is enough credit available
2. at the end of the free trial period charge the card accordingly
Are there some merchant accounts better equiped for this type of process?

Thanks

Well how are you charging for this? For example, if you pre-auth my card for say $9.95 on 10 Oct, but you are not going to do a post-auth / sale until 31 Oct, that $9.95 is more han likely guaranteed yours. It might work but usually a pre-auth only lasts for a few days.

That's correct... a pre-auth or "temp auth" (temporary authorization) will typically only last between 7-14 days.

The exact timetable that it lasts is dependent and set by each issuing bank. So one card issuing bank might make it 7 days, another 12 days, etc.

On the authorization level, it works the same regardless of who the ISO/MSP or Acquiring Bank is in that all of the authorizations are routed through the Visa or MasterCard authorization network according to the card type that is used.

And then from there it does an inquiry with the issuing bank to determine whether or not the auth request is approved (and temporarily reserved) or declined.

It is only after a pre-auth is "captured" and "settled" that the actual Interchange clearing process takes place and funds are permanently deducted from the cardholder's line of credit and then the funds - net of Interchange costs - are transferred from the Issuing Bank to the Acquiring Bank and then are funded to the merchant's local bank account.

The other thing to be aware of is that depending on the timetables you are looking at, if you go to capture an auth after it has expired, you could run into some issues including possible downgrades on the transaction which you mean you could end up paying a higher effective cost on that sale.

This is very helpful.
So would it make sense to preauth for a minimal amount say $1 or less for the free trial start. Then when the trial ends do the post-auth/charge?

Thank you!

Well keep in mind also that more than likely there will be a gateway / MAP charge on every pre-auth.

If you do do that, you might look at Verisign's Payflow that gives you 1,000 free transactions and then that would help with that. The MAP would still charge more than likely as well. And Linkpoint does not charge at all for the transaction costs.

Contact some MAPs to see if you might be able to get the transaction costs down some. Explain what you would be doing and there are some that would be willing to reduce the transaction costs some

Thank you. This has been very helpful.