Millions of Americans pay for streaming services, distributing between $5 and $75 per month. It’s widely accepted that you can avoid recurring fees like this by switching credit cards. Streamers won’t be able to find you and your account will disappear, right? You wouldn’t be crazy to believe it, but it’s a myth that changing your credit card will permanently stop your recurring costs.
Nearly 46% of Americans opened a new credit card last year, according to Forbes, which means millions of Americans have also canceled the old ones. When you change cards, these streaming services don’t just stop your service: they just start charging your new card. Granted, it might be easier to cancel your subscription directly with a streamer like Netflix. There is a largely hidden service that allows most subscription services to continue charging you fees indefinitely.
“Banks can automatically update credit or debit card numbers when a new card is issued. This update allows your card to continue to be charged, even if it has expired,” Netflix said in its press release. help Centeralthough it is not the only one to offer this functionality.
Most major card providers offer functionality that allows this, including Visa. In 2003, Visa USA began offering new software to merchants called Visa Account Updater (VAU), according to a 2003 study. American banker article. The service works with a network of banks to create a virtual tracking service for Americans’ financial profiles. Every time a person renews or changes credit cards within their bank, the institution automatically updates the VAU. This system allows Netflix and countless other companies to charge any card on file. It’s a seamless change that allows dollars to continue flowing to American businesses, without you having to lift a finger.
“Visa understands the challenges merchants face when it comes to staying on top of changes to account information,” Visa says in Promotional material to companies. “VAU provides up-to-date information on cardholder accounts in a quick, efficient and cost-effective manner, for the benefit of all parties involved in the electronic payment process. »
VAU was an instant success, quickly adopted by banks and businesses around the world. Visa’s service follows you every time your issuer switches between major credit card providers, whether it’s Discover, Mastercard or American Express. However, if you close an account completely or change credit card providers yourself, the VAU will simply mark your account as closed.
Some customers of Visa’s tracking service include Netflix, Amazon, Facebook, Google and Disney, according to a 256-page list of software adopters starting in 2022. VAU allows merchants to keep their customers connected to their subscription services, but Visa says it also helps customers.
“Visa Account Updater (VAU) was designed to ease the burden on consumers of entering a new account number and expiration date in recurring subscriptions,” a Visa spokesperson said in a statement to Gizmodo.
Visa isn’t entirely wrong about this. If your electricity or internet bill is tied to your credit card, you could find yourself in a real bind if you forget to update your new card. However, such practices can also keep people in endless payment cycles that follow them everywhere.
“The issuing bank determines whether to provide updated card information or provide a closed account or contact counseling to the cardholder via VAU,” the spokesperson said. “VAU only provides information to merchants at the direction of the issuing financial institution and only to merchants whose cardholder has already stored their payment information.”
Origins of the myth
Before services like VAU came along, switching credit cards was a pretty foolproof way to avoid recurring charges, whether you wanted it or not. When Bank of America adopted VAU in 2003, it described the product as a solution to billing changes that once left merchants with “unattractive choices.”
“The first would be for the merchant to cut off service to the customer,” a Bank of America executive said in a 2003 statement. Press release. “Another solution would be for the merchant to continue the service but send a nasty letter to the customer.”
So VAU really appeared with the advent of the Internet. Such practices have become increasingly popular in the Internet age. Subscription services have become easier to start, but increasingly difficult to stop. Recurring charges can truly follow you to the ends of the earth unless you directly contact the company to stop them.
Why it’s ubiquitous
Visa’s Account Updater program is only really marketed to businesses, so most consumers have no idea it exists. I would bet that most people have no idea that there is a way to unsubscribe from Visa credit card tracking serviceand even fewer know that they are registered by default. This is largely a hidden service for the average person, with no clear indicator from your bank or subscription service that you are being tracked in this way.
Credit cards are also widely seen as a more anonymous way to move through the financial world. Although they are generally more secure than using a debit card, make no mistake, banks are still tracking your every move. The VAU simply allows them to coordinate with companies to keep your financial information constantly up to date.
VAU undoubtedly offers certain advantages to consumers. However, it is important to understand why. The system reduces “churn” for businesses and ensures that you can continue paying them your money no matter what happens in your financial world. Banks make it easier to pay these recurring fees. However, stopping them can be much more difficult. If you really want to end a subscription, there is no substitute for calling the company and canceling.
