By Nicholas Cucci
In today's economy, the subscription-based business model is a popular way to ensure steady cash flow for your business. According to Bianca Faidutti's report for Fusebill, bit.ly/2N0IASl, 70 percent of business leaders believe subscriptions are the key to their future success.
The recurring revenue model creates a predictable and consistent stream of income while providing your and your merchants' customers with the convenience of a hands-off approach to paying for recurring goods or services.
However, this model is not without its challenges. Businesses that rely on recurring payments can find themselves in hot water when a customer's payment fails. It's a nightmare scenario for business owners, as it can quickly lead to lost revenue and frustrated customers.
Fortunately, there are ways to recover a failed payment and prevent payment failures from occurring in the first place. If you or your merchants are struggling to manage failed recurring payments, this guide is for you. I'll discuss how to handle a customer's failed payment and explore some of the best methods to prevent future payment failures.
Understanding why a customer's payment failed is the first step to recovering the lost revenue and preventing future failures. A recurring payment may fail for a number of reasons. It's important to be aware of them so you can take appropriate steps to prevent or resolve the issue. Three of the most common reasons for recurring payment failures are:
Failed payments are frustrating but can be easily resolved if you have the proper systems in place. The first step is understanding why the payment failed. If you're unable to determine the reason for the failed payment, reach out to your customer through your dunning email sequence to make them aware of their situation.
In many instances, your customer may not be aware that their payment has failed and will still expect to receive the goods or services they believe they've paid for. Ensure that your payment failed message is friendly, clear and concise so that your customer understands the situation and knows how to rectify it.
In most cases, they will likely be able to update their account with the correct information or provide you with an alternate payment method. To retain your customers, give them a few days to update their information before taking further action regarding their account.
If you're using a recurring billing system, you likely have the option to schedule automatic payment retries. This beneficial feature allows you to automatically retry failed payments at regular intervals without having to manually intervene.
Set up a payment retry cycle of at least three attempts over the course of one to two weeks if possible. This gives your customer enough time to update their account information or for any deposited funds to become available in their account.
Preventive measures can minimize the number of failed payments you experience and help keep your customers happy. There are three key things you can do to prevent recurring payment failures:
Providing them with an intuitive self-service portal where they can manage their account information themselves ensures that they can always have the most up-to-date information on file. Include links to the account management page in your payment due and payment failed reminders to customers, so they're just a click away. You should also make it easy for them to access the page on your website.
Nicholas Cucci is the co-founder and COO of Fluid Pay LLC. Cucci is also a graduate of Benedictine University and a member of the Advisory Board and Anti-Fraud Technology Committee for the Association of Certified Fraud Examiners, as a Certified Fraud Examiner himself. Fluid Pay is the ONLY 100 percent cloud-based Level 1 PCI Payment Gateway processing transactions anywhere in the world. Contact Nick at Nick@FluidPay.com.
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