The majority of online payments use credit/debit cards. They are easy for customers to use and being pull methods (merchants have the information and agency to withdraw money from a customer’s account) are ideal for subscription businesses. It’s a win-win. Well, most of the time.
Processing card payments come with their own set of complications for subscription businesses – card expiry, cancellation, overlimit, change of address, etc. The upside is that there are solutions to protect your payments. If addressed in a timely manner, these ‘issues’ can be handled easily and ultimately contribute to the growth of your business. Below are some best practices that will ensure you’re prepared for any card casualty:
E-COMMERCE: PAYMENT PAGES ON THE WEB
Many companies focus on marketing their service or product online but neglect their payment pages. They fail to realise how crucial this customer touchpoint really is. If a customer has reached your payment page, it usually means they are interested in signing up. It’s best to ensure a quick and seamless payment process to seal the deal.
Some basics to keep in mind:
Keep it short: Ask only for the essential information. You will have other opportunities later to gather more detailed profile information.
Automate: As much as possible, auto-fill fields such as card type, zip code, etc. The less work your customer have to do, the quicker the sign-up.
Validation and Errors: Identifying errors with inline validation before a form is submitted makes it faster for your subscribers to correct them. If a user hits ‘Submit’ and then has to fill the form all over again due to an error or two, the chances of customer abandonment increases.
Design for all screens: Online sign-ups are not limited to computers anymore. Make sure your design is friendly with screens of all sizes including mobile phones and tablets.
Localize: One of the most basic ways to achieve a higher conversion rate is to ensure your checkout speaks the same language as your customers. Extremely important for international customers, you should localize your payment pages for different regions.
AUTOMATED PAYMENT RUNS.
A blessing for subscription businesses, automated payment runs let companies automatically charge groups of customers at one time. They identify pending invoices for customers who have auto-pay enabled, and charge them. These runs can be ad-hoc or scheduled at a predetermined interval such as monthly, weekly, etc.
Automating this recurring task makes businesses more efficient, minimises the risk of error and ultimately ensures more predictable revenue. For customers, it reduces the hassle to continually manage payments or renew services.
Even when auto-pay is enabled by customers, you might run into instances when a card payment is denied. This could happen due to various reasons such as a temporary credit limits, network outages, etc but they can often be overcome simply by retrying. Remember, the less you ‘trouble’ your customer for payments, the better.
Identify a system that will allow you to retry failed or incomplete payments. How you retry payments should differ based on your business model and the type of payment method your customer has chosen (for example, retries on a debit card might cause an overdraft fee – which wouldn’t make a customer very happy). Ideally, you must be able to specify the schedule, frequency and the maximum number of consecutive times retries are attempted. And when a customer reaches the maximum amount of retry attempts, your system should automatically follow up with predetermined actions such as contacting the customer for a new card or payment method, downgrading the account, suspending or even cancelling the account.
AUTOMATIC ACCOUNT UPDATER – PREVENTS INVOLUNTARY PAYMENT CHURN
Credit card information change for many reasons- a subscriber might receive a new card due to an upgrade, new technology (such as the recent adoption of EMC or chip cards), expiration, a lost card, etc.
While you must certainly allow customers to update their payment information online in a self-service manner, relying solely on them to do so is risking churn. It’s best to have a system with an automatic account updater that detects card changes such as expiration date, new card number, account closure and updates your information on time. It must also alert you and your customer when further action is required.
REFUNDS, CHARGEBACKS AND FRAUD PROTECTION
While never desirable, in some cases refunds in fact help improve customer relationships. These can be offered as a courtesy, for downgrades, or cancellations. Your system must be able to process refunds and issue them directly back to the original card. In the long run, the offer of a refund provides a sense of assurance for your customers and improves retention.
Dreaded by most businesses, chargebacks and online fraud are unfortunately a reality of our lives today. Chargebacks occur when a customer disputes a charge and the sale is reversed. The issue is multiplied for subscription businesses since customers can dispute multiple charges and increase the volume of chargeback. Similarly, a single weak link along the payment chain can trigger online fraud of huge sums.
The good news is that both chargebacks and online fraud can be prevented or fought if you manage them with the right tools. Using a fraud management system is highly advisable and will go a long way in preventing online fraud. To avoid chargebacks, simplify your service offerings and keep your soft descriptors (text that appears on your customer’s credit card statement) simple and easy to understand. These preventive measures will help you save costs by reducing fees and fines that banks charge businesses for chargebacks and fraudulent transactions.
Do you see analytics as a landmine fraught with too much error prone data or a gold mine that opens up doors to customer and business success? With the right tools, you can use analytics to your advantage at every stage of the subscriber lifecycle. They can help monitor usage which can alert you to ‘risk’ or ‘fraud’ accounts and proactively eliminate chargebacks. You can analyze your data to see if you have collection issues with customers in a certain industry, geographic region, or payment methods. The more you know about your delinquent accounts, the more strategic you can be with addressing the problem or in some cases, improving the customer relationship.
Customer Communications are no longer just a marketing or customer success function. Payments offer a unique, ongoing touchpoint with customers. These can be emails or account callouts and range from a simple receipt for a processed payment to alerts and reminders.
Generally, these should be kept to a minimum, as each payment receipt is a reminder of the cost the customer is bearing. Soft descriptors dropped onto customer statements should be super clear and easily remind customers what they’ve paid for to minimize chargebacks.
Proactive and regular communication with customers will ensure you have updated information payment information and can avoid instances of expired cards, change in address, etc and the resultant account suspension or worse, cancellation. For failed payments, it’s best to alert customers immediately so they can provide alternative forms of payments.
Strategic customer communications will improve collections for the business and ensure uninterrupted services for the customer leading to a better relationship.
GLOBAL PAYMENTS – CURRENCIES, METHODS AND GATEWAYS
Expanding your business and going global requires a lot of strategic planning. Most businesses focus on marketing and sales efforts but tend to ignore a critical piece of new business – payments. Perhaps there is no other aspect of your business that needs to be easy and local than payment collection. Losing potential customers on the payment page undoes all your marketing and sales efforts.
Currencies: It’s a no-brainer that you should accept local currency, particularly if you expect your business to be sizeable in that geographical area. Requiring customers to pay in your currency of choice and consequently bear the fees and currency conversion charges will have a negative impact on acquisition rates.
Payment Methods: Equally important is accepting payments in popular local methods and gateways. For instance, credit cards are ubiquitous in the US but not in many other parts of the world where direct debit, e-wallets, or even mobile payments are more popular. There can be local differences within these too such as the kind of credit card (Visa, JCB, etc), the kind of bank transfer (SEPA in Europe, NEFT in India, Australian Direct Debit in Australia), etc
So even though credit cards are popular in the US, you need to support other payment methods if you want to go global – or else you will lose customer acquisition opportunities by simply not offering the payment method that they want and expect.
Payment Gateways: As you expand internationally, you’ll find that to effectively operate locally, you’ll need to integrate with multiple payment gateways. Payment Gateways help process payments, refunds, and provide settlement and chargeback data that aren’t usually easy to manage. Say you have been operating in the US and want to expand to LATAM. The gateway you use in the US will probably not support LATAM and you’ll need to set up a completely different gateway – a complicated and time-consuming process. The better option is to opt for a solution with pre-integrated gateways that enable you to use the appropriate gateway for your region of expansion.
For all of the above to work well for both your customers and your business, you will need an agile system that understands subscriptions and also works well within your ecosystem. It has to partner with you to reduce payment risks, lower operational costs, and ultimately enhance the subscriber’s experience.