How Subscription Merchants Can Prevent Card Declines After Retail Data Breaches

This week it was Staples. Two weeks ago, K-Mart. Before that Target, Dairy Queen, and Home Depot. And the list goes on. When it

This week it was Staples. Two weeks ago, K-Mart. Before that Target, Dairy Queen, and Home Depot. And the list goes on.When it comes to retail data breaches, all signs point to no end in sight.While it’s bad enough for customers to have their credit card information compromised, declines for recurring billing occur due to the failure of the new card information to be updated by the customer. Human nature abounds.This leads to huge problems for subscription merchants when card information that previously worked no longer does.”It’s not just the company where the data breach occurred that’s effected, but every other company downstream that the card information is tied to,” says Paul Larsen, a payment-processing consultant.So what can the subscription merchants with recurring billing cycles do to avoid losing out on revenue?According to Larsen, the only thing they can do is proactively scrub their active accounts against the database so they can be aware of customer account changes.Visa, Mastercard, and Discover all keep a huge database of credit card information into which banks can contribute the fresh information associated with re-issued card accounts. Some processors, like Chase Paymentech and First Data, are integrated with the databases and can retrieve this new account information which ultimately helps preserve subscriptions that would otherwise implode.Larsen recommends that subscription merchants intensively use the Account Updater service to automatically update the payment information of their active subscribers. While some card processors provide this service, as we previously reported, it may require some legwork to find out if yours does.Account Updater is the only way to automatically repair re-issued card accounts, without the need for customer engagement, thereby preventing the subscription churn it would naturally cause. All other efforts to acquire the new/re-issued credit card information would require the customer to take action.Beyond that, Larsen indicates that it’s just pure hard work for subscription merchants to maintain the level of data integrity necessary to hedge against the next data breach, which is likely to happen again.

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