Subscription Success: How payment continuity powers recurring revenue

Did you know that failed payments are the leading cause of lapsed subscriptions? This often goes unnoticed as a silent saboteur for businesses that rely on recurring revenue.  Whether you are running a subscription-based business or looking to boost revenue through recurring payments, this article will help you discover strategies to enhance your revenue while ensuring that your customers' payments are not interrupted.

What did you use to make your last payment? Your card? Your smartphone? Your watch? Your car? When Mercedes-Benz announced plans to introduce embedded in-car payments, they demonstrated that old industry paradigms are losing their relevance. Yes, money still makes the world go round, but how it does it is changing fast. Programmable and embedded payments are everywhere and yet increasingly invisible. From a festival wristband to a car dashboard, a consumer can trigger a payment by behavior (like parking or fuelling) or set up a subscription in-situ across many daily, personalized touchpoints.

Customers and businesses increasingly opt for the predictability and convenience of subscriptions and even programmed payments. Shoppers store their card-on-file, setting in motion a near-subliminal flow of funds so goods and services are provided regularly in the consumer’s life without a second thought.

In an increasingly digital economy, businesses must innovate to match this new mode of commerce. This involves strategic integration of digital wallets, deployment of subscription services, micropayments, and delivering loyalty programs, where possible. Whichever of these strategies best matches your business model, payment continuity remains a fixed priority. A frictionless payment is good until a card expires or another issue arises without the customer knowing. Out of nowhere, the regular-as-clockwork system comes grinding to a halt – unless a smart payments continuity plan is in place.

Just as a well-thought-out business continuity plan ensures operational resilience during crises, payment continuity ensures that revenue streams remain unaffected by payment processing issues. Here, we’ll explore why payment continuity is a significant revenue driver and how to achieve it. 

“There are many underutilized card payment optimization tactics available to merchants that can materially improve performance and boost revenue for their business.”
‍Forrester trends report

How card-on-file can rescue your revenue

Card-on-file models, which store payment credentials for frictionless transactions, are good for revenue. Not only do subscriptions deliver repeat custom and financial predictability, but card-on-file adoption has been shown to correlate significantly with increased spending over time. And when a customer stores their card details on file, a business can implement a range of powerful continuity strategies.  

Payment continuity is vital for keeping revenue streams open. It is also crucial for meeting customer expectations. The demand for a seamless payment experience is non-negotiable; customers won't persevere through payment failures or the hassle of updating card details unexpectedly.

There’s an inextricable link between payment continuity and the strategic utilization of card-on-file capabilities. Your payment continuity plan must prioritize keeping card data updated and secure to ensure uninterrupted revenue flow through subscriptions or loyalty programs. This helps minimize disruptions caused by expired or re-issued cards. Like any other payment, low acceptance rates can impact recurring payments. Ensuring that cards are tokenized (using Network Tokens) helps to increase acceptance rates because it gives issuers increased visibility and confidence in each transaction.

(Source: Mastercard ABU, 2023)           (Source: Visa Spending Insights, 2021)

Understanding this, Nord Security formed a strategic partnership with Checkout.com to elevate their payment solution.

Thanks to Checkout.com's solutions, NordVPN saw a 15% recovery rate on false declines. The introduction of Network Tokens has further led to a 1.5% uplift in Acceptance Rate.

Your play-by-play payment continuity plan

So, how do you implement a payment continuity plan tailored to your business needs? Let's delve into key strategies that serve as the building blocks for a robust and reliable system:

‍Optimize recurring payments

Recurring payments like subscriptions or micropayments provide a recurring revenue stream, offering more predictability than one-time transactions. In addition, it can build a loyal customer base through seamless experiences, eliminate late payments or missed opportunities, save time and resources on billing tasks, and increase overall business productivity.

• Account updates: Implement a real-time or batch account updater solution to ensure hitch-free renewals for subscriptions and other recurring payment models. This will automatically update card information, reducing disruptions caused by expired cards.
• Processing expired cards : A simple, flexible solution that can capture otherwise lost revenue, allowing your businesses to process expired cards safely.
• Network Tokens: Utilize Network Tokens to maintain secure and continuous payment updates, enhancing the success rate of subscription-based payments.
• ‍Apple Pay Merchant Tokens: Implement Apple Pay Merchant Tokens to improve payment experiences within loyalty programs, ensuring smooth handling of recurring payments and consistent payment continuity across devices.

Read more: Push payments vs pull payments: What's the difference?

Regularly review and update processes

Stay ahead of the curve by periodically reviewing and updating your payment processes. In a constantly evolving landscape, staying on top of industry trends, security standards, and emerging technologies is key. This proactive approach ensures that your payment systems remain resilient and effective.

• Data access: Monitor and analyze transaction data for patterns, success rates, and potential issues. Regularly analyze payment success rates, identify declines or anomalies, and take proactive measures to address any potential challenges before they impact your revenue flow.
  
• Intelligent Acceptance: Use an advanced artificial intelligence payment solution to apply machine learning alongside your own expertise and increase conversion.

Payment gateway selection

Choose your payment gateway wisely. Opt for a reliable and secure partner that boasts a robust infrastructure. Ensure that your selected payment processing provider supports advanced features such as automatic card updates, tokenization, and artificial intelligence (AI) that can turn your data into actionable insights with results. This careful selection lays the foundation for a technologically advanced and secure payment environment.

• Solutions you need from your payment service provider: Network Tokens, Account Updater, secure card storage, payment expertise, and digital wallet availability

Just as a business continuity plan guides decisions during disruptions, these payment continuity strategies and solutions empower data-driven decisions for uninterrupted revenue streams.

Conclusion: Simplifying payment continuity

Embracing recurring payments and leveraging advanced tools like Account Updater,  Network Tokens, and AI offer more than revenue predictability.

In our increasingly connected and intelligent world, smart merchants recognize the urgency to adapt swiftly. Leveraging card-on-file capabilities, integrating recurring payment options, and collaborating with payment experts for a comprehensive payment continuity plan becomes crucial.

So, for large organizations and enterprise-scale businesses in particular, implementing a robust payment continuity plan should be a top priority. It ensures that your revenue streams remain uninterrupted, your customers remain happy, and your business remains profitable.

There’s just one pivotal question to answer: is your business ready?