Litle & Co.’s Recurring Transactions Best Practices Help You Gain a Competitive Edge and Improve Conversion Rates

Today’s consumers spend $1 trillion annually on recurring transactions and installment billing, utilizing their credit cards for routine monthly payments in order to accumulate miles, points or some other form of reward.  Litle & Co. believes that in order to remain competitive, merchants—particularly online, membership and subscription services businesses—must embrace and support these transaction types as part of their overall offering.

Recurring Transactions Best Practices helps you take full advantage of recurring transactions to convert traffic into long-term customer relationships and maximize revenue opportunities.

A smart recurring billing strategy can serve as a powerful revenue generator.  When implemented correctly, recurring billing can substantially increase the number of consumers who try your product or service.  So when you look for payment processing partners, look for a platform purposefully-built with the tools and methodologies necessary to drive recurring billing.

Recurring Transactions Defined

Recurring Transactions are used when a consumer agrees to pay a regular monthly, quarterly or annual fee for a product, service or membership. The dollar amount of each charge may vary depending on the product or service. Examples include health club memberships, insurance premiums or subscription fees.  As a result of supporting recurring transactions, merchants realize several benefits including: timely payments, reduced processing time/cost and lower risk of error due to manual entry.

Recurring transactions can also be used to offer installment billing plans, which means a consumer can purchase a product in a defined number of installments, typically of equal value. Examples include direct response television (DRTV) products and many catalog products. By offering installment billing, merchants can achieve increased sales of higher ticket items, timely payments and lower risk of chargebacks.

Best Practices for Using Recurring Transactions

Best Practice # 1 - The first billing event is always the most critical

In order to engage your customer, you should fine tune your offer to make it as attractive as possible. Equally important is processing authorization transactions in real-time so that you can offer rapid feedback to your customers. Provide cardholders with a toll-free phone number for recurring service customer services and remember to disclose all terms and conditions or applicable fees.

Best Practice #2 - Avoid needless interruptions in your recurring billing series

Convenient, effortless billing is a key aspect of the product you are offering to your customers. Interruptions can lead to cancelled service. Recycle authorizations based on BIN analytics rather than contacting customers and asking for alternative forms of payment. Use Account Updater services from Visa and MasterCard to increase the success rate of series billing events. Avoid termination of customer accounts on the first failed billing event, which can lead to attrition.

Best Practices #3 – Offer Alternative Payments

Give your customer additional payment choices such as PayPal. Alternative payments that accommodate recurring transactions enable merchants to reach a broader demographic. Today’s consumers are faced with shrinking credit lines and are either cutting back immensely on credit card use or stopping use entirely. Many consumers are wary of sharing their information online or simply prefer the convenience of an alternative payment method for a single transaction. Ultimately, more payment options mean more incoming payments.

Best Practice #4 - Utilize Fraud Protection Tools

Fraud can undermine the profitability of any business. From the first transaction, utilize fraud protection tools: AVS, CVC2, CVV2 & CID, and after the first billing, never store CVV2/CVC2/CID data. Using address verification service (AVS) and CVV2/CVC2/CID, the three/four digit security code that is printed on the back or front of credit cards, can help minimize the risk of unknowingly accepting a counterfeit card. When collected and submitted during the authorization process it indicates whether the person placing the order is in possession of the credit card. This data allows the merchant to make a more informed decision before completing the card-not-present transaction.

Best Practice #5 - Implement soft billing descriptors

Soft billing descriptors are an effective and useful tool that helps cardholders identify charges on their statements. The merchant name is usually truncated to three letters plus an asterisk followed by a more detailed description of the actual product or service being billed. By utilizing soft billing descriptors, merchants can more clearly identify transactions on a cardholder’s statement. This capability is especially beneficial to merchants who process transactions for multiple products with different company or product names. Be sure to check with your processor to see if they support this feature and for their format requirements. Example: “ACM* Great TV Hits 1 of 9 800-555-1234”.  “A successful recurring billing strategy relies on flawless payment processing,” added Botelle. “Litle & Co. is dedicated to supporting its customers’ conversion rates with tools such as real-time transaction processing and the right selection of alternative payments. By utilizing our recurring billing best practices, merchants can minimize billing interruptions while maximizing additional customer service demands.”