Visa Inc. notified online merchants this week that they cannot present offers from third parties without asking for their card information a second time.
The issue came to the forefront in December when Sen. Jay Rockefeller 4th, D-W.Va., asked Visa, American Express Co. and MasterCard Inc. to clarify how they handle "data pass" transactions.
Such transactions occur when a consumer, usually shopping at a familiar website, receives an offer for a discount or reward and does not realize it is from a different merchant and often comes with unwanted recurring fees, Visa said.
Visa published the rule clarification to ensure that online companies better understand that the practice is forbidden, said Martin Elliott, Visa's senior business leader for U.S. payment system risk.
Visa's operating rules prohibit merchants from sharing cardholder data with any entity not directly involved in completing the transaction. "We felt it better to explicitly call it out," Elliott said.
Merchants must prompt consumers to re-enter their card information when they accept an offer from a third-party merchant to verify that they know it is a separate purchase, Visa said.