Automated recurring billing solutions to help prevent breakage
Auto pay. It’s one of modern life’s greatest conveniences. A recurring payment is set up, the money is transferred on a periodic basis, often monthly, and nobody has to think about it any more. Those who want to be paid are happy, and those that do the paying are happy. Right? That is, until that recurring payment “breaks,” when you as a merchant seek authorization and receive a decline.
Before we get into how to prevent a payment from breaking, let's look at what causes the breakage in the first place. Expired credit cards are one reason. Accounts closed by customers is another. Additionally, credit card companies rules change, requiring new cards; the EMV chip-card transition is one example of how outside changes can affect breakage on recurring billing accounts.
Today, more than ever, credit cards are also replaced due to compromised card data. When fraud strikes, customers receive a new card and new card number and, in some cases, perhaps even a new bank account number. The downfall for a merchant is that recurring payments have the potential to break, and most likely will break eventually––unless a system is in place to prevent the breakage from occurring in the first place.
If you don't already have a recurring billing solution in place, it's worth seeing if this is something your business would benefit from. Read on for more information about how recurring billing may be a good fit for your business.
What types of businesses could benefit from recurring billing?
Customers like the convenience of recurring billing because it eliminates the need to remember to send a check or make a payment online for ongoing services. Recurring billing is also convenient for merchants because it eliminates the need to mail or email regular statements, saving time and money and freeing up staff to focus on other duties. Recurring billing also helps streamline accounting and keep revenue flowing in.
There are a wide variety of business types that can benefit from recurring billing. Additionally, as website subscriptions explode, there are more every day. Some examples include:
- Property management companies
- Utility companies - water, cable, internet
- Gyms and health clubs
- Tanning salons
- Insurance companies
- Daycare and childcare facilities
- Schools – dues, fees, lunches, etc.
- Subscription services – magazines, newspapers, memberships, etc.
- Nonprofits – accepting regular donations
- Food delivery services
- Massage and spa businesses
- In-home senior care
- Lawn and gardening businesses
- Pet sitting and dog walking services
- Insect and pest control companies
- A plethora of online businesses that offer subscriptions
The benefits of automated recurring billing.
What if you could automate a system to help prevent the breakage of your auto-pay customers? An automated recurring payments engine does just that––and more. It’s a pre-built platform that can be integrated into your billing system to setup and manage recurring billing and help those recurring payments to automatically continue without interruption.
With an automated recurring payments engine, merchants and their developers can design the type of billing program that suits that particular business. Flexibility allows for customization of settings including billing intervals, discounts and automatic account updates, which will help prevent breakage in case of a credit card account change.
How your payment processor can minimize broken payments.
Card brands (e.g., Visa, MasterCard) offer an Account Updater feature that’s designed to provide merchants with updated card numbers in the event of a card replacement, but it’s wise not to rely on this service to capture all of the updated data on your behalf.
Instead, choose a payments processor that offers recovery solutions for automated recurring billing. Here are some of the benefits of relying on a processor for recurring payments engine support:
- The merchant no longer has to worry about regularly updating card information–– that burden shifts to the payments processor.
- The merchant maximizes customer lifetime values by keeping more customers on recurring payments, without breakage.
- The payment processor helps to turn more authorization declines into approvals.
- The payment processor automatically makes card update requests to the card networks, then processes the transaction with the new card data.
- The payment processor has protection in place to minimize the exposure of valuable card data via end-to-end data encryption.
In today's busy world, convenience and automation are a plus for merchants and consumers alike. While automatic payments make it easier for consumers to pay bills, an automated recurring billing solution streamlines payment collection for merchants. Contact Vantiv today to ask about the recurring billing solutions.