It’s no surprise that the subscription business model has taken hold of so many ecommerce merchants. In theory, it’s pretty hard to beat: once you convert a lead into a customer, all you have to do is keep giving them what they signed up for and they’ll reliably generate revenue for you every month. The unfortunate reality is that even payments from satisfied customers can vanish unexpectedly due to credit card declines, and getting them to update their payment credentials can be as challenging as converting them in the first place. What can merchants do to reduce credit card decline rates?

The first thing to bear in mind is that this is an extremely common problem for merchants who deal in recurring billing and subscription-based payment models. According to Visa and Mastercard, an average of 15% of recurring payments are declined, but for some industries the rate can be double that. Often, this is because cardholders have maxed out their credit limit, but it’s also common for cards to be declined because payment credentials have changed, and not just the expiration dates—30% of credit cards are reissued every year, frequently because of fraud and data theft.

What’s especially frustrating for merchants is that many customers seem to regard a declined subscription payment as a sign from the universe that it’s time to let that subscription lapse, anyway—the success rate for updating a card after its first decline is about 5%.

Full Text:
https://www.chargebackgurus.com/blog/how-to-reduce-credit-card-decline-rates

©Chargeback Gurus 2020
Production: Tyler DeLarm
Narration: Phil Claffey