With the subscription fee taken directly from the bank account, there is no dependence on third parties, again limiting the risks of payment failure. Rather than it being the payer’s obligation to send, the merchant has complete control of the transaction, deciding the time and place that they will take the money.
This intelligent retry approach takes the onus away from the end user. 🎙️ Listen to our podcast with GoCardless to find out how to manage payments failures & leverage smart payment retries here. Take GoCardless as an example, its Success+ solution uses recurring payment intelligence to predict and manage payment failures recovering, on average, 76% of failed payments for merchants. This allows the solution to automatically schedule the optimal collection day for the individual customer, increasing success rates considerably. An effective payment facilitator (payfac) will handle all transaction monitoring, incorporating machine learning models to assess the probability of payment success. Manual retry strategies typically rely on arbitrary rules, adhering to a strict day for attempted payment collection, for example, every third day. This pre-emptive action can reduce the administrative burden of chasing failed payments and the resultant impact on revenue. New solutions that leverage advanced algorithms can reduce failure rates by monitoring customer behavior and putting in place customized measures to improve the success of payment retries. Leveraging payments technology for recurring & subscription payments Automating payment recovery & Smart payment retries Payments can fail for many reasons – insufficient funds, a block by the issuing bank, an expired card, a closed bank account, a lost card – and can be both voluntary and involuntary on the part of the subscriber. Data suggests that credit and debit cards have as high as 10-15% failure rates on the first attempt in a recurring payment model. Payment failures are the largest impediment to the growth of the subscription model and can cause serious customer retention and loyalty issues.
Payments processed by bank transfer or company credit card are practical for one-off transactions but they typically fall short in a recurring revenue model, creating serious problems for both sides of the transaction. Structural problems in recurrent payments causing customer churn SaaS platforms have been working with payment service providers for many years but there are unique aspects of a subscription model that can create both challenges and opportunities and these need careful consideration. SaaS providers adapt for subscription success Subscription figures continue to rise from this high base as consumers seek out products and services they can enjoy in the safety of their own homes during the pandemic.
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