Subscription billing is a popular and convenient way for businesses to charge clients for ongoing services — but the use of recurring transactions does come with a few potential risks. Customers may file a chargeback for a variety of reasons or cardholder account information may be outdated, both situations resulting in the loss of revenue. Fortunately, there are three key steps that business owners can take to minimize these risks while enjoying the benefits of subscription billing.
This step might take the most work, but providing very clear terms at the initial transaction of a recurring subscription can eliminate most of the issues that arise with these transactions. Customers should be thoroughly informed on how subscriptions payments will be processed, including when the charges will occur and the total amount of the charges, including any additional fees, restrictions, and the cancellation policy. When these details are established from the start, chargebacks and even cancellations are much less likely to occur. It’s also important to remind customers well in advance of any changes to the subscription payments — and even when expected recurring payments are about to be charged.
Offering timely, quality customer service is another key method to preventing risks in using recurring transactions. Regular communication with subscribers will keep your company and its service — as well as its value — in the front of your users’ minds, making it more likely that they will want to maintain their subscription. Company contact information should be readily available in case subscribers have questions, whether they are using your website, reading an email or reviewing marketing materials. As for cancellations that may occur, the policy should be as straightforward as possible, and termination of the subscription should be processed quickly to avoid any problems.
Finally, managing data accurately and securely is also an important method to preventing chargebacks and other issues with subscription billing. Expiration dates should be stored with cardholder data to ensure that current card information is available and used. Services like Visa Account Updater and MasterCard Automatic Billing Update may also be leveraged to ensure that subscription payments aren’t interrupted due to cardholder account changes.
Taking these three steps — clear terms of service, strong customer support and quality data management — can help prevent issues with subscription payments, often before these problems begin. While cancellations and chargebacks may still occur, use of the best practices above will ensure that they occur much less often.
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