If your business depends on recurring payments, such as SaaS subscriptions, monthly membership or “Cards on File”, your ability to collect a consistent recurring revenue stream is directly impacted by changes to credit card information. When cards expire, and each time a massive card data breach happens, new credit cards are issued with updated payment information. Now, with the implementation of EMV, every single (non-EMV) card in circulation will be updated in the near term. Download our eBook Credit Card Processing 101 to learn more about EMV.
Your customers are then forced to update their card information with you directly. Most will do so willingly and proactively, but what about the ones that don’t?
Recovering new card data from your customers is costly, time consuming and will ultimately result in one of the following three outcomes:
- You are unable to connectwith your customer, resulting in Churn
- Consumers change their mindand decide to cancel, resulting in Churn
- Your team must“re-sell” your entire solution, resulting in lost opportunity cost
These problems are echoed throughout the business community as subscription and recurring billing models continue to grow and define revenue collection for Service and SaaS based businesses. With Churn rates ranging between 4% and 10%, there is a constant battle of bringing new customers in the front door, while leaving the back door wide open. Sales and marketing efforts must exceed double digit growth, just to keep up.
This “hamster wheel” strategy is hampering growth, productivity and creating a significant amount of unnecessary work for your team.
What to do?
While there are multiple strategies to stay in communication with your customer base, and triggers that will send automated messages when a credit card declines, touching your customers and asking for updated payment informationdisrupts their day and creates an opportunity for them to flee.
The easiest and most cost effective solution to mitigate losses due to declined cards is to address the reasons cards are getting declined.
Most often, cards are declined due to expired cards, or cards have been re-issued due to a data security breach or EMV conversion.
One solution that eliminates the need to communicate with your customers when these declines happen, is to utilize a payment processor that has “Account Updater” features.
Account Updater will automatically harvest new card data from the card issuer, typically once per month, and store it for future payments.
Merchants can also upload stored cards to have them updated. Companies like AT&T utilize this service, and they simply communicate with their customers once an updated card has been acquired.
The account updater feature is utilized today by many of the largest print media companies, SaaS and subscription based businesses. With economies of scale bringing the cost down for this feature, many small to mid-size businesses can now leverage this technology and increase revenues significantly.