Recurring Payments Management—What Should Be Your Strategy to Fight Necessary Evils of Chargebacks & Friendly-Frauds

Subscription billing has become not only a profitable business model but a favourite one for both retailers and recurring customers. Currently, subscription business companies are catering to subscribers belonging to different generations. Gen X, millennials, and Gen Z are sharing the same subscription business ecosystem.

The youngest subscribers are known for their love for speedy billing and payment methods. And, digital wallets are speedier than credit cards. Then what is the reason that many young subscribers still prefer online recurring payments through their credit cards? Is this because they can spend more than the limited amount of money that they actually have in their bank account?

No, there is another reason. By using credit cards, subscribers get Customer Protection which means they are protected against any online fraudulent activity. However, some customers can misuse this feasibility.

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

How Misuse of Customer Protection Can Be A Cause of Friendly-Frauds?

Following are the ways that customers might opt to misuse customer protection:

  • They show that they forgot to cancel the subscriptions, and they are charged for the services that they did not need.
  • Product or services do not satisfy their needs and requirements—subscription dissatisfaction.
  • They got charged twice while they changed their subscription plan.
  • The customer cancelled the subscriptions, but he still received the bill for recurring services.
  • Sometimes customers are not willing to pay without any reason.

If you are facing the circumstances that are mentioned above, then you are not the only one in the market. All these activities from the customer side are considered friendly frauds. Customers use services and forward complaints to the banks that provide credit card services to get chargebacks.

Now that you know friendly frauds are not new, and your recurring billing and payment system is not the first being affected by this plague, let us take you to some effects ways to manage chargebacks:

Transparent Policies

Your policies about billing and payments should be crystal clear for the customers. For this, you need to train your team to explain everything clearly to the customers beforehand so they may not complain that the subscription plan or the payment policies were not clear to them.

It is said that you must not count your chicken before the eggs hatch. When you onboard customers, retailers need to control the excitement and give a thought to the subscription cancellation as well. Tell your new customers clearly about the subscription cancellation policy. And the reason to fairly communicate your business policy with the customer is that customer would not be able to file for a chargeback with the reason that he had ambiguities regarding subscription plan etc. So, be open about your refund and return policies.

Communication with the Customers

Statistics show that, in most cases, when customers demand chargeback, they do not even communicate with their retailer. They directly contact the bank that is providing them with a credit card and forward the complaint. So, if you want to avoid chargebacks, then one of the effective ways is to communicate with your customers. You should also encourage them to contact you anytime if they have any issues regarding their bills or payments.

Especially, when you have to ask them to pay their recurring payment, it is better to talk to them. You can resolve their genuine issues. You can also collect data that will help you overcome the problems that make your customers go to the option of chargeback.

Also Read: Significance of Automated Communications in the Growth of Subscription Business

Notifications Before Automated Transactions

Subscription management systems offering the feasibility of automated recurring payments management frees customers from the worry of keeping in mind the deadline to pay recurring charges every month. The automated system process the transactions at the end of the month. What you need to take care of is to at least send a notification to the customer before processing the transaction for his recurring payments.

You will probably think that customers already agree to the terms and conditions regarding recurring billing and payments, then why do you need to notify him every time before the automated transaction for his recurring charges. You need to do this to avoid chargebacks. So that the customer would not find this reason that he was not asked before money transaction from his account when he thinks of getting chargeback from your company.

Proactive Approach

You need to adopt a proactive approach to not give even a single chance to those customers who get involved in friendly frauds. For instance, some retailers ask customers through recurring billing and payment management platforms to submit their credit card details before the trial period starts. Though the trial period is free of cost, the customer is still required to enter the credit card details. The system verifies the validity of the credit card which is a good practice. It can help you already filter out people who can later become part of any fraudulent activity. So, play safe. Ask for the credit card details when the trial period ends.

You do not need to give your customers even a single chance to play foul with you and ask for chargebacks in the end.

Immediate Response

Chargeback is an issue that needs your immediate attention. Whenever a customer demands chargeback, you should communicate with him ASAP. Your prompt response can provide you with a chance to communicate with your customers, find a way out, and convince them to stay on board.

Some customers first come to you before they go to their credit card companies. If you make them wait, they will not waste time waiting for your response. They will simply move to your competitor. Avoid this worst-case scenario and timely respond to your subscribers.

Also Read: This Is How Self Service Subscription Management Portal is Improving Customer Satisfaction for SaaS Companies

Option of Refunds

Sometimes, there is no other option but to pay back the money. In this situation, it is better to offer a refund rather than letting customers go to the option of chargebacks. We do not tell you to refund charges to all subscribers who contact you. You can check the history of the customers, then decide whether you need to refund the money or not. It is just about offering the best customer experience and maintaining your image in the market.

Concluding Remarks

Customer satisfaction provides you with a firm basis where you can erect the building of your subscription business. Whether small or large enterprises, all businesses put their effort to offer their customers maximum satisfaction. However, sometimes, customers exploit these efforts, and this behaviour becomes the cause of friendly frauds that plague the recurring billing business market.

SubscriptionFlow is a recurring billing and payment management platform that can help retailers in overcoming the causes of friendly frauds. Our recurring payment management platform only offers the above-mentioned advantages but our team also remains active to find new ways to help retailers minimize the chances of friendly frauds and manage chargebacks.