Managing Recurring Transactions

Calendar of recurring transactions_CardinalCommerceWhat better way to ensure a steady cash flow than to have products or services that require consumers to subscribe using a recurring payment, guaranteeing a steady stream of income for as long as your consumer remains satisfied and wanting more of the products or services they are receiving? The revenue keeps rolling in, month after month, with few requirements on your end. Right? Not so fast. Recurring billing and subscriptions can be quite a hassle for merchants, as they are frequently the cause of transaction disputes with consumer. More often than not, those disputes often end up forcing merchants to process chargebacks that can create challenges in payment processing down the road. Fortunately, there are steps companies can take to take some of the risk out of managing recurring transactions.

Setting Up Subscriptions Correctly

The first recurring transaction processed by a business is going to require an initial set-up of the process. Verifying that the cardholder’s identity matches the account and that the proper queries with the correct user authorization are submitted correctly will go a long way in avoiding future problems. Sales receipts provided to consumers should clearly indicate that charges paid are part of a “recurring transaction” and should include details such as the timeframe and frequency of future charges. A copy of the information provided to the consumer should be kept on hand by the merchant as well, as it could prove useful in resolving any future disputes. The goal is ultimately to prevent losing revenue from cancelled subscriptions and chargebacks.

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Make Security a Priority

Recurring payments naturally requires the storage of consumer information, and most consumers and merchants should be aware at how devastating it can be to both consumers and the businesses they frequent when this information falls into the wrong hands, due to inadequate security. Sensitive consumer data must be stored securely and kept current. Third party security solutions are available which protect cardholder information and prompt merchants when updates to that information are necessary. Managing recurring transactions also requires using secure encryption when processing transaction. Any reasonable investments made to protect the sensitive information of cardholding consumers are going to be well-worth it in the long run.

Build Trust with Consumers

Clear communication with consumers signed up for recurring transactions is vital to the success of your subscription services. Notifying consumers before they are billed, and labeling all recurring transactions properly will help avoid consumer anger and confusion, which leads to chargeback situations. Merchants should never trick their their consumers into “forgetting to cancel” free trial periods or promotional offers, as these deceptive practices only lead to numerous chargebacks and bigger problems down the road. Keeping positive contact with your consumers throughout their subscription period can provide a heads-up when negative situations arise, which you can then fix before those situations result in a subscription cancellation or chargeback.

Conclusion

Managing recurring transactions correctly can help companies ensure their subscription services are a positive feature of their business offerings as opposed to a potential headache waiting to happen. Merchants must set up the subscriptions correctly, make security a priority, and build trust with consumers to ensure success.  

Cardinal Commerce

Are you experiencing chargebacks in your online store? Are your consumers abandoning their carts before buying? Learn how Cardinal Consumer Authentication can eliminate fraud and false positives, and provide the benefits of 3-D Secure with friction-free checkout for your buyers. One Connection to Cardinal drives digital commerce. Download the brochure now.


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