How COVID-19 is shaping the way we shop
We talked to some of the world’s leading subscription and recurring companies to find out how they approach payments for maximum growth.
We learned that, if you have a carefully planned and executed payments strategy, you'll deliver a better customer experience, increase retention and ultimately grow your revenue.
Based on our findings here are the key best practices:
A $0 or $1 authorization is a way to ensure that a card is valid before an actual transaction is made. The simplest way to explain how it works is as a preauthorization.
No money is actually deducted from the customer account, and it is carried out before charging a real transaction.
Where possible, we recommend a $0 authorization. Some customers don't understand why a $1 charge appears on their account – even though it is not actually deducted. But, not all issuing banks accept $0 authorizations. Use the amount that the issuing bank prefers to achieve the highest authorization rate.
If you validate your customer’s card details at the point of sign-up, it's more likely the next payment will be successful.
One of the most common reasons for a transaction rejection is insufficient funds. But there are also other reasons a transaction might not go through. By analyzing the data from each transaction, you can increase your chances for success.
Examples: If the rejection is due to technical issues or Do Not Honor, you may want to retry in a space of time from an hour to three or four days. Sometimes it's simply a matter of insufficient funds.
Businesses that bill monthly often find it works to identify local payday cycles and trying to bill immediately after that. This is especially applicable if customers are paying with debit cards.
Roughly 3% of cards expire every month. And this doesn’t account for cards that have outdated billing information or have been lost or stolen. So you won't always have the most up-to-date information, which can lead to declined transactions.
For example, if a card is stolen and a new one sent to your customer, you won’t know they have a new card.
The major card schemes offer a service that lets you check your stored customer cards to see if there are any updates.
In many parts of the world, credit cards are not the main way to pay. In China, only 1% of online shoppers pay with international credit cards, while 520 million shoppers use Alipay.
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