Subscription billing: Essential must do’s and paths to tread carefully

By Alexandra Smith

Isaac Hall, CEO of Recurly, highlighted subscription billing primers and pitfalls.  Application developers and managers, should use this information to smoothly navigate your subscription billing experience.

Primers and pitfalls of subscription billing: General Information

• Visa and Mastercard go together: You cannot accept one and not the other.
• It’s hard to find a bank that supports a start-up; Hall recommends Silicon Valley.
• You can get away with not accepting American Express customers; it should have little effect on your customer base.
• Every gateway uses the Luhn Algorithm.
• You may choose to use Javascript to check if a credit card number is valid.
• One way to find a merchant is through Fee Fighters, where merchant accounts put bids on your business.

Safeguard your customers and sail smoothly

• Customers in Europe will expect a PDF invoice, if you need a support app found the best pdf converter by https://www.sodapdf.com/pdf-converter/ you can search for or edit any text in converted files much like you are using a word processor. Keep in mind that their bank statements show transactions not yet settled.
• Prevent fraud with Address Verification Service (AVS), which works very well in the U.S., or Card Verification Value (CVV), which works globally. Both prevent fraud but do not protect from charge-backs. CVV should only be used on the first transaction. You cannot legally store or encrypt a credit card number.

• If a card fails, provide a detailed explanation for the customer. This will save everyone time. For instance: “There is a hold on the account,” or “We only accept Visa and Mastercard,” as opposed to “Your card is declined.” There are soft declines, such as insufficient funds, as well as hard declines, such as the account is closed. If customers don’t know why, they will call for support, and you’ll have to go back and forth with your bank.
• Make it easy to reactivate a canceled subscription, and allow customers to sign up again even after their subscription has expired. Customers are indecisive and wishy-washy.
• Have a process to follow up with declined transaction renewals.

Deep waters

• Price your products only in U.S. currency. If you choose to price in additional currencies, the conversion rate will change month to month. Let your customers’ statements sort out the currency.
• You may only void a transaction prior to it being settled. After a transaction is settled, you can issue a refund usually within a period of 30 or 90 days.
• Avoid charge-backs; the process to resolve is not easy.
• You can be liberal about providing refunds; your bank will actually think you are being responsible. However, you will look sketchy if you have a lot of charge-backs.
• Get customers’ consent before charging them for a subscription! (Ringtones are an example of horrible non-consent based abuse of billing). Auto-subscribing without consent is against the new federal ROSCA Law.
• Overall, be transparent so your customer doesn’t have to work hard to find out information or resolve an issue.
• Never email or log a full credit card number.
• If you sign up to use a gateway (such as PayPal) through a bank, you will never be able to change the bank you use as long as you are associated with that gateway.

Isaac Hall is on Twitter and is CEO of Recurly.