By David Goodale of Merchant-Accounts.ca
In our final part of our three-part series on what membership organizations should know about recurring payments, we look at how to qualify for Recurring Billing Interchange.
You can read part 1 here and part 2 here.
Technical Requirements: How to Qualify for Recurring Billing Interchange
We should start by clarifying that recurring payments don't automatically get lower interchange rates. If you just send a credit card transaction each month to your payment processor for the same amount it won't qualify for the special pricing, because they'll have no way to know that it was a recurring payment. To them, it would appear to them as a bunch of 1-off transactions.
If you are building your own custom integration to a payment processor, you must find out if there is a recurring billing flag or identifier so that you can pass it with the transaction. You must speak to your payment processor to find out how to do this. In fact, if you do recurring payments and do not yet have a payment processor, you should start by making sure your processor agrees to:
Without meaning to make this discussion overly complicated, it should also be pointed out that we are referring to your "payment processor" in this discussion, but more specifically your merchant account provider and payment gateway must both support this. If this is confusing to you, there is a video explaining the components of an e-commerce transaction here.
If the prospect of building your own integration into a payment processor is too complex, you can use a pre-existing platform, such as Dynamics Association Blueprint, to handle your recurring payments. Dynamics Association Blueprint is one of the few recurring payment platforms that ensures each recurring transaction is properly flagged to get the lower recurring interchange rate. It's important to talk to them about this because it must be configured both technically (at a systems level) and also on the payment processors side - so a close working relationship with your processing partners is vital.
The good news is that it's certainly achievable if you are aware of the issues, take the time to ask the questions, and select partners that will support your business through the process to make sure it's done correctly.
Dealing with expired credit cards, technical hiccups, and other issues
It is much easier to make a sale to an existing customer than it is to convert a cold prospect to a customer. Recurring billing is a frictionless way to generate additional revenue from your existing customer base. It's unfortunate when problems occur to upset a finely tuned customer list.
In many cases, it's not your fault or even your customers fault. For example, a customer may have had their card compromised and it will have been re-issued by the bank. If this happens, the replacement card will have a different card number and expiry date. This would cause your recurring payment to fail.
Or, it could be as simple as your customers hard having expired, and a new card sent out with a new expiry date.
Fortunately, the card brands have addressed this issue through the Card Updater service which is supported by both Visa and Mastercard. Integrating it directly to Visa or Mastercard can be challenging, so it is an optional service that some payment processors provide an easier integration. This makes it fairly easy to easily submit a previously processed card, to request new billing credentials. It's a tremendously valuable service to any organization whose revenue is billed on a recurring basis. The account updater service is not available from all credit card processors, so you should ask your payment processor if this can be supported.
CRM Dynamics Offers a Recurring Billing Management Platform
CRM Dynamics offers a fully integrated payment gateway that allows Tokenized Credit card transactions from with CRM and within Portal applications. Your solution is PCI Compliant (meaning you do not store sensitive credit card information) while still retaining the expiry date, last 4 digits of the card, and a token to allow re-charging the same card. CRM can then automatically apply reoccurring payments such as monthly subscriptions, bi-weekly charges, on-demand charges or client self-serve with automated checkout.
Why not download a trial and learn more about our payment gateway. We work with most existing credit card authorization organizations.
About the Author
David Goodale is CEO of Merchant-Accounts.ca, and is one of Canada's leading experts in the field of e-commerce payment processing. Over the past 20 years, David has worked with thousands of merchants across Canada, the USA and throughout Europe. David consults for large and complex e-commerce businesses on issues such as cross border payments, interchange optimization, and particularly on approval for hard-to-approve businesses such as airlines, travel businesses, crypto payments, and also for unique and interesting startups.
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