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Don’t Let It Be Your Churn: Subscription Sellers Prepare for Bank of America Card Reissue

By: Eric Christensen
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Bank of America announced that it will send four million Visa debit and credit card holders new contactless cards this month. Targeting customers in the New York City, San Francisco and Boston metro areas, the bank joins a number of organizations who are part of the growing tap-to-pay movement. With more large retailers like Target and CVS giving consumers the choice to use this type of technology at checkout – Mastercard estimates the top 60 percent of U.S. merchants accept contactless cards – they’re increasingly looking for their banks to add the option to their plastics.

As Bank of America gears up to alter a heap of card numbers, subscription-based merchants of those four million consumers must be prepared to avoid a potential wave of involuntary churn.

Payment failures happen to be the number one cause of this type of churn, and credit card changes account for 40 percent of cases. Considering businesses estimate that they lose an average of 17% of annual subscription revenue to churn under normal circumstances, it’s easy to see how an event like the Bank of America card reissue could significantly impact a merchant’s bottom line. To get ahead of the curve, sellers need the right management solutions that will ultimately make the buying experience easier for customers by having their systems automatically update when payment changes occur. Then, they will reduce levels of churn and build stronger relationships with shoppers.

Making It Easy

For merchants looking to circumvent the arduous process of reacquiring customers, they should integrate robust payment technologies to help optimize billing cycles. In return, they can ensure themselves and their customers a seamless transition and services will continue to flow as normal. To successfully preserve their customer bases, there are three key actionable tips merchants must put into motion:

  • Leverage account updaters. Account updaters are tools provided by acquirers such as Visa and Mastercard which allow card issuers to feed account updates to a broader network of merchants. If a shopper’s debit or credit card number changes, the banks will then share new credentials with merchants via the network. Cardholders nor merchants need to worry whether the latest billing numbers are on file, and so, a better customer experience can be offered.
  • Optimize cadence. Merchants should connect with acquirers about account updaters on a regular basis. Creating standard time intervals to check in with card networks leaves room for less disruption in service and more optimal payment processing.
  • Have a good recovery strategy. Though merchants hope to avoid experiencing surges in their churn rates, they should still expect some consumers to fall through the cracks. How merchants choose to communicate with consumers is critical during this period. Shoppers can be contacted via email about their failed transactions and be encouraged to update their accounts online.

The Power of Partnerships

One thing sellers should know is they don’t have to go through this process alone. Merchants can look to strong ecommerce partners like Digital River to boost their payment methods and capabilities, as we’re already armed with the necessary technologies and relationships.

Digital River has built API-based product enhancements which enable sellers to create a seamless shopper experience while growing revenue through increased authorization rates. As mentioned, sellers need to use an account updater to handle the upcoming flood of new card numbers. Digital River’s optimized account updaters are constantly checking systems to ensure merchants have correct billing information. Additionally, with established relationships with both issuers and acquirers, sellers can leverage our connections and expertise in the subscription space.

One step further, Digital River is using machine learning and predictive algorithms to study how banks issue their cards and their guidelines on expiration dates. These insights can help companies streamline billing scheduling, customize their renewal recommendations and ultimately subvert the risk of rising churn levels in the long-term.

Tap-to-pay transactions will only grow further in popularity and adoption in the next 3-5 years. Merchants who choose this moment to ready themselves with the proper technology will be positioned to experience the least amount of loss.

To learn more information about the payment services Digital River offers, click here.