Keeping a Customer Focus While Managing 100 Percent Credit Card Churn

Subscription businesses (also known in the payment processing world as “card-not-present” merchants), know the impact of out-of-date credit card data in our customer files

Do you have a “chip” credit card yet?  I do.  My credit card provider reissued me one after they noticed someone was using my card at a grocery store a few thousand miles away, right after I had just used it at  local store! Somehow the person who stole my information also had a fraudulent physical card that they presented at the grocery store.  Fortunately for me, my credit card company noticed it, declined it, and called me right away.

As a subscription business (also known in the payment processing world as “card-not-present” merchants), all of us know the impact of out-of-date credit card data in our customer files – lower retention, customer churn, and revenue loss.  Utilizing available Credit Card updater programs and keeping in regular contact with customers are both best practices for staying up to speed with the rapidly growing rate of reissued credit cards, which in the past few years has been around 30-40%.  By this October, 100% of credit cards will be reissued to adhere to new security standards using chip technology and subscription businesses are going to have to get smart on updating their customer’s billing records.  

While breaches cost businesses millions of dollars, the impact on your customers, subscribers, and members is dramatic as well.  Updating credit card information on a consumer’s online, mobile and other subscription and ecommerce services is a pain that many simply won’t willingly go through.  Worse yet, what about those who have experienced fraud? Like myself,  many will not be as comfortable with providing information to merchants but may still want a service or product from many companies they do business with via online or mobile commerce.  Has your business thought about that?  For inspiration in understanding how data fraud impacts your customers, consider this story, it’s from a colleague who asked that I keep their identity anonymous: 


Like 79,999,999 other Americans who at some point had personal information being stored with Anthem, Blue Cross, Blue Shield or other companies within the Anthem BCBS umbrella, I received a letter early in 2015 explaining how my personal information was exposed in a breach that they identified and announced on February 4th.  As with the Home Depot and Target data breaches, for which I also received emails or letters, I was offered the token of free credit monitoring for a year.  I disregarded this one, dropping it immediately in the recycle bin before I even made it all the way into the house.

Luckily for me, the woman who stole my identity to open numerous credit cards in my name has great taste.  Even luckier is that Neiman Marcus was quick to respond to the potentially suspicious person shopping in their store with a brand-new Neiman credit card opened the day before, online.  Perhaps they beefed up their own security after being the victim of a breach a little over a year ago, along with Target and Michael’s and a few others.  In any event, I received a phone call asking if I had, in fact, been the one to open the account.  The gentleman at Neiman’s then told me the same woman had opened a Pottery Barn account two days earlier.  Neiman’s is now working to draw the woman back into the store to make an arrest.  When I called Pottery Barn, they confirmed that a new account had been opened right before Easter, and used to purchase almost $2,500 worth of home furnishings and décor the same day.  While consumer protection regulations mean I won’t be out the money for these fraudulent charges, merchants large and small will be saddled with the cost in the form of chargebacks, unrecoverable merchandise, and increased measures to reduce fraud, to name a few. 

The Anthem data breach is a bit different than the retailer data breaches; in this case, banking information was not stolen, but personal information required to steal someone’s identity for the purpose of establishing credit cards was exposed.  In my personal experience, this time, someone who had access to my information seems to only have opened two, private label accounts.  There are 79,999,999 other potential souls whose information might be in the process of being used to open MasterCard, Visa, Discover, or American Express cards, subjecting virtually every merchant, online or offline, to an increased risk of fraud.  


To make matters worse for offline (Card-not-present) merchants, this is the sort of scenario where new “chip” credit cards, the purported panacea to credit card fraud, offer no additional protection.  Have you thought about how your subscription business will navigate credit card processing in this new reality?  More importantly, have you thought about how your business can help ease the anxiety of your customers who have experienced fraud?  

As your business thinks through how to navigate 100% turn-over of your customer credit card data, put your customers at the center the solutions and communications you put in place to mitigate that churn.  You will likely be rewarded  with good will and retention rates that you want (and need) to maintain your robust subsription business.  This is not an optional issue you should manage, its an issue you must manage.  100% churn of your customer’s billing informations is guaranteed to have a serious impact on your recurring revenue business.


If you are interested in learning more about this topic and understanding tactics on how to prepare.  please join us May 19th at Noon Eastern for an important online discussion:   Chip Cards:  Don’t Let a Good Thing Crush Your Bottom-line.    INSIDER Guide to Payment Processing Paul Larsen,will discuss why the new “Chip” Credit Cards will completely upend your Card-not-presence business — and how your business needs to prepare for these changes.  For more information, please visit our event page.

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