CNP Expo: Recurring Billers Face Challenges

May 21, 2013

Setting up a system where the customer automatically pays online for a recurring service can greatly improve your revenue stream and make the customer happy that they are not constantly keeping track of payments. But, merchants that want to leverage a subscription model also face challenges that were explored Tuesday in a panel discussion at the CNP Expo.

One pitfall merchants face is when account information or card numbers expire or change. Updating the account information is costly and can result in the loss of the account if the customer resents being called, warned Vytas Siulte, director of operational analytics for One Technologies.

Account Updater is an automatic feature that shares information about cardholders, which can help make the transaction less expensive, tells a merchant whether the account is canceled and updates account data after account numbers change. Calls to customers for updates cost $5, but an electronic update costs pennies. And, Siulte said, commerce goes more smoothly: “You don’t see higher chargeback rates because the card has been updated.”

The way consumers are using payment cards and the types of cards they use also will impact recurring billers. The use prepaid cards is expected to double and might lead to more trouble with billing, panelists said. Also, Social Security accounts have begun to be put on prepaid cards, which might lead to some delay in transactions.

Merchants do have options to reduce the cost of rejected cards, said Chad Roll of PayVisors. When a card is rejected, Roll said card processor should give you as much information as possible about the rejected card, so you can update the account less expensively.