Best Payment Gateway Features for Subscriptions
Look for these features to lower churn and optimize revenue.
According to CFO Research, subscription revenue business models are on the rise and Global Banking and Finance Review reports 70% of business leaders say subscription business models will be key to their prospects in the years ahead. Clearly the opportunity for success with subscription companies is growing. The opportunity also comes with challenges. Subscription metrics firm ProfitWell estimates that despite the rise in sign-ups, up to 40% of subscription churn is coming from failed payments.
Knowing that a significant portion of churn has to do with payments, it’s also clear knowing what the best payment gateway features for subscriptions are critical to successfully supporting subscription-based and recurring revenue-based companies.
Alternative Payment Options
With worldwide online sales growing from $1.34 trillion 2014 to $5.21 trillion in 2021, alternative payment options cannot be ignored. They’ve become a necessity. As a merchant, accepting only credit cards is no longer sufficient. When a customer doesn’t come across their preferred payment method during the payment process, that customer will most likely abandon the cart and move on to another merchant. Make sure your payment gateway supports alternative payments such as Apple Pay, Google Pay, ACH and direct debit. Having these payment options will open the door to more customers.
Account Updater is a must for all subscription-based businesses. It ensures steady revenue by helping you avoid failed transactions or gaps in services provided to your customers. With Account Updater, you can rest easy knowing that your receivables will not be delayed by expired cards, changed account numbers or closed accounts. Account Updater should be one of your payment gateway’s key features to ensure the card data is correct, cutting down on decline rates and reducing churn.
Automated Level 3 Processing
Automated Level 3 Processing autodetects and fills in information necessary for corporate and procurement cards to process at a lower interchange rate – oftentimes leading to significant savings. When you pass-thru more data you benefit from reduced interchange fee rates as well as increased authorizations. When you partner with an experienced subscription and recurring payments service provider, they’ll ensure you’re sending the correct amount of information to the issuer, including CIT (cardholder-initiated transaction) and MIT (merchant-initiated transaction) data.
Security & Fraud Protection
When it comes to taking payments, security and compliance are paramount. Whether your business is subscription-based or not, you’ll want a secure payment gateway that provides encryption, tokenization, P2PE and 3D Secure for eCommerce.
You also want to protect your company against credit card fraud. At a minimum, the gateway you’re considering should encrypt data at the time of transaction, offer address verification and be security code configurable. It should also be able to check and block transactions, be configurable by transaction source since the characteristics of transaction risks vary by source.
Making decisions that impact your business – and how you go about doing your business – are never easy. Hopefully, this provided you the insights to know the best payment gateway features for subscription businesses and the questions to ask when talking to a payment gateway provider.