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3 Best practices to process credit card payments
Worldpay Editorial Team
July 10, 2019
Recurring revenue reflects a ongoing commitment to your business by those who matter most—your customers. Subscription payment models have provided the foundation for industries, from newspapers to utilities, and from software to digital services.
Today, subscriptions are more popular than ever. That’s in large part due to the ease of setting up recurring payments, and their accessibility to new and growing businesses. The ability to tap into recurring credit card processing is fueling the rapid rise in subscription payment models.
In a typical recurring payment scenario, a customer provides your business with a payment method—a credit card, debit card or bank account information—and grants their approval to be billed at regular intervals (weekly, monthly, annually) for goods or services you provide.
Recurring payments are useful for many types of businesses–from tanning salons to gym memberships, music streaming services to pet food delivery—almost any business can benefit from the predictable revenue that recurring credit card processing makes possible.
Grow your revenues with subscriptions
Subscription models start with setting up a recurring payment service. Whatever you sell, here are three keys to success with recurring payments.
#1 – Use an account updater service to capture updated card information. Obtaining a customer’s valid credit card on file doesn’t cement the relationship forever. A customer’s account information can (and does) change, like when a card expires or is lost or stolen. An account updater service helps keep revenue flowing when a customer forgets to provide their updated card information, all with no manual effort on your part.
By partnering with a merchant services provider that offers an account updater service, you’re able to reduce and recover declined authorizations by automatically seeking updated credentials. Account updating services help reduce the “leakage” that can occur when recurring payment charges are declined due to account changes.
#2 – Have contracts/terms of service in place before billing customers. When offering recurring billing services it’s important to have a straightforward and completed contract or terms of service agreement with your customers. Agreement between you and your customers on the terms of service is critical piece for streamlined billing, helps reinforce your reputation and protects your bottom line.
Signed contracts or terms of service agreements are especially important to help protect a business in the event of a chargeback. Be sure to include a clear explanation of how recurring billing works, including when accounts are billed, what happens to the customer’s account in the event of repeated declines and how the agreement can be terminated.
#3 – Have a robust fraud and security solutions in place. Electronic payment processing involves risk from fraud. However, processors take every reasonable effort to reduce those risks to protect your business. When choosing a recurring payment service provider, look for proven experts in payment security measures such as encryption and tokenization.
Be sure to seek a recurring payment service with a demonstrated track record of delivering secure payment processing of all types. Security considerations should be top of mind in order to reduce risk, like having your recurring payment processor securely store sensitive data, reducing the scope of PCI-DSS requirements.
How recurring payments benefit consumers
Consumers enjoy the convenience of auto pay that automatically deducts the pre-arranged subscription fee for your business services. They don’t have to worry about payments, so they’re free to focus on the experiences and value your business offers. Other recurring payments benefits for customers include:
- Automated receipts sent to text or email
- Ability to easily update payment method and subscriptions levels
- Flexible payment methods like ACH transfers from checking accounts
How recurring bill payments benefit businesses
Recurring payments offer many benefits to business owners as well:
- Fewer late payments and more predictable cash flow
- Enhanced customer loyalty by making payments simple, easy and worry-free
- Eliminated costs associated with manual billing, mailing, and postage
Contact one of our payment experts to learn how a recurring payments engine can power customer payments, help keep your customers happier and accelerate your revenue while reducing costs.