The pain points of subscription payment processing

Online recurring payment processing is not a standalone process rather it is linked with side by side running many other processes e.g. billing & invoicing. Often subscription management and payment processing software efficiently handles the online recurring payment processes, still, there are some challenges that subscription merchants may encounter.

In this blog, we are going to shed light on some of the inevitable recurring payment challenges and the relevant solutions for them. Before we delve into the details of these challenges you can consult the following blog for the details of the recurring payment process and the role of payment gateways in it.

Online Payment Processing for Recurring Payments—A Definitive Guide About The Payment Gateways for Subscription Management

Payment Failures

Payment failure simply means that your customer tries to pay his subscription charges at a certain time but fails. The causes of this failure can be varying. For instance, the customer tried to pay his charges online but couldn’t due to scheduled maintenance of his or her bank or maybe the payment gateway is down.

This experience of payment failure can become the cause of the complete cancellation of the subscription.

Another cause of payment failure emerged out of manual payments processing. Sometimes customers forget about the deadline for the payment of the subscription fee. Your subscription management and payment processing platform should be efficient enough to recognize such possibilities. It should generate notifications and reminders for customers so the payments can be collected at the right time.

Many customers use their bank cards to pay the subscription fee and the causes of payment failure via bank card are also varying e.g:

Card cancellations
Bank credit card limits
Incorrect card information
Insufficient amount in the bank
Change in the terms to use the card

Though payment failure is a necessary evil in the subscription business, you can manage and deal with this challenge with a well-thought plan. First of all, you need to have good communication with your customers. You can either use your automated subscription handling system to communicate with customers or contact them manually when the payment fails. Always remember a payment failure does not mean you will never receive the payment, or your customer will surely cancel the subscriptions—these are just worst-case scenarios. Automated emails and notifications coupled with manual communication is the best way to not let one payment failure spoil your customer relationship.

Disintegration in System

You need to get this straight that when it comes to a recurring payment processing platform, you need a complete payment processing solution that can holistically manage everything from invoicing to reporting. A disintegrated subscription & payments system means your online payment system is not supporting all payment channels that you utilize.

The problem of disintegration usually rise when you start a new subscription business through a platform that offers limited functionalities. Your business expands, the number of subscribers increases, and you start getting subscription payments from different channels, but your subscription management software fails to fulfil your increasing business requirements.

A well-integrated online recurring billing and payment management system supports multiple currencies to help you deal with international clients and is integrated with different payment gateways to ensure data security as well. All you need is to identify the right time to switch to the right recurring billing platform or integrate the existing one with the applications that will allow you to perform all billing and payment functionalities.

Data Security

Most of the online recurring bills are paid through bank account cards. Your customer is required to share sensitive payment information with the online payment system. The whole process from billing to payment connects the bank accounts of the customer and the merchant. Any data breach, whether at the customer side of the merchant side, can become a cause of some major fraudulent activity.

Today, many subscription management platforms are cloud-based and secure enough to avoid any attempt of a security breach. Different payment gateways are also integrated with the subscription management systems to encrypt the customer data while processing the payment.

Customer data security has become one of the biggest challenges for the subscription business community. If you want to protect your customer data from any leakage, then always integrate payment gateways with your subscription handling platform that have a PCI compliance. Payment Card Industry Data Security Standard (PCI DSS) defines the security standards that companies accepting online payments should follow to maintain a secure environment for customer data.

Also Read: Online Payment Frauds—Types, Challenges, Detections, & Preventions

International Banking Procedures

Often subscription-based businesses cater to international clients. When it comes to payment processing from beyond the borders, the procedures for payment vary from one bank to another. A payment system has to manage interest rate, foreign cross-border fee, taxes, and multicurrency at the same time.

The rules for the payment and transactions of different banks are different. The chances of delays or errors are higher.

The best way to deal with the challenges of the complexities and ambiguities that occur because of payment processing beyond borders is to offer the best support services. Make your support representatives 24/7 available to address the concerns of your customers.

Revenue Leakage & Dunning

Now that we already know the online payment failure is one of the leading causes of subscription cancellations—churn. It is quite a challenge for subscription merchants to manage their involuntary churn because things do not end with the cancellation of subscriptions. Involuntary churn causes revenue leakage. Companies always target to reduce churn rates and streamline their recurring revenue stream.

To deal with this issue, you need a proactive strategy. You should facilitate your customer in a way that even if he has failed to make payment for the subscriptions, he may not leave you (though some customers use payment failure as a pretext to cancel their subscriptions). One of the effective strategies to avoid revenue leakage caused by the increasing churn is smart dunning.

Dunning is the process of communicating with customers for payment recovery. You should send automated message alerts to your customers about the deadline to pay the subscription fee. If payment is failed, your support team should contact the customer to resolve the payment issues. Even if you want to handle this through a completely automated dunning process, your emails and messages should be explanatory enough that the customer gets his queries resolved.

Also Read: Dunning Management As An Effective Way to Recover Payments

Management of Discounts and Promotions

Discounts, vouchers, and other promotional offers are part of every business and just like any other business, it is also a challenge for the subscription business companies to manage discounts and offers. Sometimes customers opt for discounts or offers associated with upgraded plans for some time and later cancel them and move back to the subscription package that they were previously using.

Managing these changing customer choices during invoicing and payment is not easy. You need to find the subscription management software that allows you to decide the duration of the discounts, the redemption of the coupons, play around to offer different types of discounts, and manage change in the billing in real-time. An effective subscription management software can create, offer, and monitor coupons and discounts as well as smartly prorate the billing as per customer preferences.

Also Read: What is Prorated Subscription Billing? How Can It Benefit the Recurring Revenue? And, What Are The Risks Of Not Using the Prorated Billing? Learn More About Optimal Billing

If you want to fight back these online subscription payment challenges, then SubscriptionFlow is the online platform that you need. Here you can manage the payment processing without any glitch or friction. You can integrate third-party applications that you need for your business as well as payment gateways. Errors during subscription processing are common but you need your system and policies to be responsive to not let these errors harm your business. As far as the system is concerned SubscriptionFlow is there to manage everything. But you need a competent team to improvise your policies to deal with payment errors.