Negative Option billing refers to a business practice where a merchant provides a free trial or sample of goods/services, requires a credit card upon sign up and then bills the customer in the future unless they proactively cancel with the merchant.
This is a very common technique to increase conversion. You have to make the sale when the (potential) customer is most excited about the product, and in many cases, that's right at the point where they're signing up. They may still be excited a month later, but initial dreamy-eyed enthusiasm always gives way to the reality that no product is quite perfect.
Negative option billing can quickly turn into a dark pattern if you push it too far, and this dark pattern is very much frowned upon by card providers, because it leads to more chargebacks. To avoid the extra chargebacks, follow these guidelines from the article:
- Don't create a false expectation that the product is free.
- Communicate up-front when the first charge will come, and send a reminder 5 days before.
- Don't require the card information up-front.
The last point is dubious (it will cost you a lot of sales), but the other two should be clear.
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