Credit Card Swap Might Not Hinder Ongoing Subscription Fees from Streaming Platforms
Streaming Services and Recurring Charges: The Truth Behind Changing Credit Cards
Millions of Americans drop a cool five to seventy-five bucks a month on streaming services, and you might think changing your credit card will free you from these persistent payments. But, hold up! It's a common misconception that swapping credit cards will guarantee an end to recurring charges.
More than half of Americans opened a new credit card last year, and with that, a whopping number of gamblers like yourself cancelled their old ones. But here's the kicker: when you switch cards, those sly streaming services don't just cut off your service - they transfer the charges to your new credit card. Sure, it might be more effort to cancel your Netflix subscription directly, but you should know about a hidden service that keeps these subscription tricks up its sleeve.
"Banks may routinely update customers' credit or debit card numbers," Netflix admits in their help center (and they're not the only ones). This feature is available through big card providers like Visa. In fact, Visa launched this service called Visa Account Updater (VAU) in 2003, and it's incorporated into the systems of countless corporations worldwide [American Banker, 2003].
The VAU system collects your financial info when you renew or switch credit cards within your bank. This way, Netflix and other corporations can continue charging your preferred card, regardless of whether you switch or not. It's a simple, seamless switch that keeps those dollars flowing to corporate America while you barely lift a finger.
"Visa values transparency," the corporation states in marketing materials to businesses. "VAU delivers updated cardholder account information in a timely, efficient, and cost-effective manner, benefiting all parties involved in the electronic payment process."
VAU was a smashing success from day one, quickly adopted by banks and corporations across the globe. The service follows you wherever your issuer switches between major credit card providers like Discover, Mastercard, or American Express. However, if you decide to close an account entirely, or opt for a different credit card provider, the VAU will simply list your account as being closed.
Powerhouse customers of Visa's tracking service include Netflix, Amazon, Facebook, Google, and Disney [2022 List of VAU Adopters]. VAU keeps customers locked into subscription services, but Visa argues that it also aids consumers.
"Visa Account Updater was designed to help consumers avoid the hassle of repeatedly updating account information," said a Visa spokesperson in a statement to Gizmodo. There's no denying that this system reduces the annoyance of updating account numbers and expiration dates for recurring subscriptions. But, practices like these can also keep people trapped in endless cycles of payments that follow them everywhere.
The Origin of the Myth
Before services like VAU came along, switching credit cards was virtually guaranteed to stop recurring charges, whether you wanted to or not. When Bank of America adopted VAU in 2003, it boasted the product as a solution to billing changes that once left merchants with dreadful choices.
"One possible choice would be that the merchant would shut off the customer's service," said a Bank of America executive in a 2003 press release. "Another would be that the merchant would continue the service but deliver an unpleasant letter."
So, VAU came to life in the age of the internet. Practices like these have become increasingly popular on the virtual frontier. Subscription services have become simpler to initiate, but hard to terminate. Recurring charges can trail you to the end of the world unless you reach out to the company and cancel them directly.
Visa does not provide a straightforward way for consumers to opt out of its credit card tracking service for recurring charges directly. However, you can manage or decline recurring charges by taking the following steps:
- Contact the Merchant Directly: Reach out to the merchant or service provider to cancel recurring charges. This is usually the most straightforward way to stop these transactions.
- Contact Your Bank or Card Issuer: Inform your bank or card issuer about your intentions to halt future recurring charges. They might have additional steps or processes to prevent these transactions.
- Use Card Network Tools: Some card networks offer tools like Rapid Dispute Resolution (RDR) or the Cardholder Dispute Resolution Network (CDRN), but these are mainly for merchants to handle disputes rather than for consumers to opt out of tracking.
- Legal and Regulatory Considerations: If you feel that your card information is being misused, consult regulatory bodies or consumer protection agencies for advice.
- Utilize Third-Party Services: Some services allow you to monitor and manage subscriptions. These can help identify recurring charges, making it easier to cancel unwanted subscriptions.
For merchants looking to manage recurring billing and comply with Visa's requirements, it's essential to follow Visa's guidelines on merchant-consumer agreements and to obtain explicit consent from consumers before setting up recurring charges [3][4].
If you're interested in opting out of Visa's tracking within a merchant's system, reach out to the merchant directly, as they handle these agreements and tracking services rather than Visa itself.
Best Practices for Recurring Payments
- Be Clear and Transparent: Ensure that all terms and conditions, including billing cycles and amounts, are explicitly communicated to customers at sign-up for recurring payments.
- Obtain Explicit Consent: Always secure affirmative consent from customers before setting up recurring charges.
- Make Cancellation Easy: Provide a straightforward way for customers to terminate subscriptions to avoid disputes and chargebacks.
- The future of technology in subscription services is clear as Visa Account Updater (VAU) is incorporated into the systems of numerous corporations like Netflix, Amazon, Facebook, Google, and Disney, allowing them to continue charging preferred cards, even when switching or renewing.
- When considering switching credit cards to avoid recurring charges, it's important to know that services like Mastercard are part of VAU and may update customers' card numbers, allowing the transfer of these persistent payments to new cards.
- Streamers should be aware that in order to prevent unwanted recurring charges, the most straightforward approach is to contact the merchant directly, inform their bank or card issuer, or explore third-party services for subscription management.
- To comply with Visa's requirements and manage recurring billing effectively, merchants are advised to follow best practices, such as being clear and transparent, obtaining explicit consent, and providing a simple method for customers to terminate subscriptions.
