Report: Card Declines on Subscriptions Increased Throughout 2015, EMV to Blame?

June 30, 2016

Report: Card Declines on Subscriptions Increased Throughout 2015, EMV to Blame? Card declines for businesses leveraging a subscription model averaged more than 12 percent last year, according to a new report from recurring-billing technology provider Recurly . The San Francisco-based company, which looked at 25 million transactions over the course of 2015, noted the EMV rollout almost certainly affected that number. The analysis found that declines increased throughout the year, averaging nearly 16 percent in Q4. Seasonality also could be a factor, the report said.

“The fourth quarter of any year is one of increased retail activity as consumers shop for holiday gifts and increase the balances on their credit cards,” the report’s authors wrote. “However, an additional factor was at play in the latter part of 2015 as the credit card industry continued to roll out EMV cards. Card-holders received new credit cards designed with additional security measures to defeat point-of-sale fraud—cards which included new expiration dates and, in many cases, new security codes. Unless this information is updated, transactions can be declined.”

In addition to declines, the report also examined churn and found subscription merchants can expect to lose around 10 percent of their business to attrition in a typical year. Churn rates are higher at the beginning of the year than at the end, Recurly found, and B2C businesses generated churn rates higher than the average (11.2 percent) while B2B was slightly lower than the average. Twenty percent of total churn was found to be “involuntary” (i.e., when subscriptions are canceled because of invalid card information on file).