If you are a recurring revenue business when was the last time you tried to subscribe or purchase a product or service from your own company? Was it fast and simple? Did you get frustrated? Was your preferred payment type missing on the checkout page?
Companies leveraging the vast benefits of recurring revenue face some challenges that they should be aware of and closely manage. One challenge is updating account information when it expires or changes, a potentially costly process if not done right.
It’s important to know that payment processors provide an automatic service to do this, such as Account Updater. This shares information about Visa and MasterCard accounts, telling your company when an account is canceled or changed, automatically updating the account data with new account numbers or expiration dates. It can make updating account information far less costly. Account Updater is especially relevant as Home Depot recently reported that 56 million cards may have been compromised. Calls to customers for updates are estimated to cost $5 per customer, but an automatic electronic update costs only pennies. Plus, the process is hidden from your customer, because everything happens behind the scenes.
The way consumers use payment cards, as well as the types of cards they use, also impact recurring billers. Do you know the most popular payment methods your customers use today? Is it changing? Are there payment methods that you’re missing?
The use of prepaid cards is expected to double in the near future and typically leads to higher decline rates for your company. Do you have a strategy to address prepaid cards in your recurring revenue stream?
There are options to help reduce the cost of declined cards and the poor customer experience associated with a card decline, but first you need to understand the nature of the declines before you can act.
When a card is declined, your payment processor should give you as much information as possible about the declined card so you can update the account less expensively. The Information available about the payment transaction is as important as the actual transaction and can help your company better serve its customers and simplify the payment process.
Anything you can do to decrease the “friction” of customers signing up and paying for your products and services should be an ongoing activity for your company, especially as new payment options become available in the marketplace.