If your company’s lifeline is recurring revenue, preventing customer churn is crucial to success. Subscription businesses stay afloat by maintaining a high uptime, reaching out to disengaged users and leveraging their current customer base for highly qualified referrals.
Until recently, it’s been nearly impossible to minimize the loss of revenue associated with outdated payment information. Account UpdaterAccount Updater Account Updater (VAU) is a service that facilitates and encourages customer satisfaction, retention and loyalty by exchanging updated account information between participating merchants and Visa / Mastercard or other card issuers. MasterCard calls it Automatic Billing Updater (ABU) while Visa terms it Visa Account Updater (VAU), a service which provides companies that rely on recurring billing with up-to-date financial information on customers, can ensure that your revenue stream remains as stable as possible.
Why Account Updater Matters
While very little data is available on how often a typical customer will update their billing address or credit card information, experts estimate that subscription businesses can expect to lose up to 5-10% of their business annually.
It’s not a matter of customer dissatisfaction or disengagement, but simply being unable to continue recurring billing on clients who haven’t updated their payment information. Manual follow-ups to receive accurate information from customers can be successful, but outreach can be costly for a SaaS company, especially if multiple attempts are required to make contact.
How it Works
A select number of payment processors can provide access to all account updates held by Visa or MasterCard. This is very useful for subscription businesses. If a customer orders a new payment card numberPrimary Account Number (PAN) Card number (PAN) Every payment card (be it a debit, credit, gift, or a similar card) has a unique number associated with it. This number is usually printed on the card and required to uniquely identify this card and to refer to it in every transaction. The whole card number is called Primary Account Number (PAN), and the first six or eight digits of it are also called the Bank Identification Number (BIN). Also, a card may contain a card security code, which, along with the card number, can be used in card-not-present transactions., receives a new expiration date or updates their billing address, the information is automatically updated.
This removes the need to individually contact customers whose payments have declined, minimizing cost and providing less disruption to the revenue from recurring billing.
Benefits of the Program
Repeated declined payments can have a significant negative impact on SaaS companies. Manually updating payment information requires an enormous time investment from sales or customer service representatives. Finally, customers also benefit from having a positive payment experience with their SaaS subscriptions. There’s no disruption in their service and no need for them to reach out with updated information.
For subscription businesses and other companies that rely on recurring billing as a source for revenue, Account Updater is undoubtedly a positive change. Your monthly churn due to outdated payment information will be minimized.
Credits: Chargebee
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