Competition for subscribers is fiercer than ever, making it critical to deliver a seamless, intuitive consumer experience from enrollment to payments. Subscribers are lost not only from failed recurring payments, but slow payment processing. Profits are lost with high payment processing and acceptance costs and overly complicated integrations. In our current competitive environment, last thing you need are headaches that drive up cost and drive subscribers to other options.
Mike Rogers, VP of Business Development at ACI Worldwide, and expert on subscriptions and telco/cable bill pay R&D, revenue optimization and customer experience will lead this briefing and discussion and take Q&A from attendees.
This webinar will cover how to recognize the pain points that chronically and uniquely challenge subscription providers. Join to understand how issues such as slow payment posting speeds, high acceptance costs, and complicated integrations can be thorns in the sides of providers. You’ll leave this briefing with key takeaways on how you can optimize the customer experience.
What You Will Learn:
- What are the payment and billing pain points for subscription providers.
- How your business compares to industry wide trends for these pain points.
- The impact of these pain points on your revenue and retention.
- Tips on how to avoid and manage these pain points.
On-Demand Playback
Presentation Slides (PDF)
Click here to download the slides.
About Our Experts
About Mike Rogers, Vice President, New Business Development, ACI Worldwide
Mike Rogers serves as Vice President of Business Development at ACI Worldwide where he helps billers and merchants achieve their market share, revenue, customer experience & cost savings goals. Mike currently leads a vertical team focused on Subscriptions, Telco/Cable and Bill Pay R&D. He also directly leads many of our key relations with the Card Networks. Mike has served the payments industry for the past 25 years introducing numerous payment innovations. On the Bay Area baseball fields, he is known as “Coach Mike.”
About Kathy Greenler Sexton, CEO, Subscription Insider
Kathy Greenler Sexton is the CEO & Publisher of Subscription Insider, a media company uniquely focused on the business of subscriptions. Subscription Insider reports on daily subscription economy news and delivers best-practice information, training and research through memberships, training events and conferences. Subscription entrepreneurs and executives representing all sectors of the subscription economy depend on Subscription Insider to improve decision making, team skills and business profitability. Learn more at qa.subscriptioninsider.com and www.subscriptionshow.com.
Transcript
Kathy Greenler:
Welcome to Subscription Insider’s online briefing, recurring payment pain, remedies for chronic billing headaches. So hello and welcome. I’m Kathy Greenler Sexton. I’m CEO of Subscription Insider and I am thrilled you are with us today. Today we’re going to be learning how to recognize the pain points, the chronically and uniquely challenged subscription providers. So today we’re going to learn key takeaways on how you can optimize your recurring payments and your subscribers experience for increased retention, lower costs, and higher profitability. All important topics. To help us understand this important discussion is an expert on subscriptions, bill pay R&D, revenue optimization and customer experience. And that expert is Mike Rogers, VP of New Business Development at ACI Worldwide. Welcome, Mike.
Mike Rogers:
Hey, good morning. Good afternoon. Good evening, Kathy. Pleasure to be doing this again this year.
Kathy Greenler:
It’s great to have you. We are in totally good hands with you sharing all this data that we’re about to go through. So for those of you who are new to Subscription Insider, we are a media and information company focused on servicing and supporting executives, working and growing businesses in the subscription economy. We serve up daily business news, we have training, we host events and conferences and online briefings just like this. I want to talk to you about an upcoming calendar that we have. We have next week another briefing on changing your business model changes everything. This briefing actually features Forrester Research senior analyst, [inaudible 00:01:59] Lily Varon. And we’re going to explore how transforming your business model to meet the ever-changing customer expectations that we have and we need to evolve with. It impacts billing and finance. So we’re going to explore that.
Kathy Greenler:
And that briefing is next week, March 18th. And to learn more, you go to subscriptioninsider.com/events. And drum roll, please. Subscription show 2021. I am so thrilled to be talking about this. This is our flagship conference where we address recurring revenue subscription and membership businesses, most pressing needs and challenges. And we’re executives like all of you, can connect with peers and talk to technology and service leaders from across the entire subscription ecosystem in our exhibit hall. So literally, we just opened up the website this morning and we will be in-person in New York, November 1 through 3. And we’ll also going to be having live streaming for those who cannot join us in person. So go to subscriptionshow.com for those details. And finally, if you are looking for a technology service or consulting partner that really does understand recurring revenue, I recommend you go to our subscription business vendor directory.
Kathy Greenler:
We have the leading platforms tools and experts on just about anything you could need to support your business. From subscriber management, payment processing, legal IT services, retention and subscription marketing. And in our payment processing category as an example, if you can go to the next slide, Mike, ACI Worldwide. This is a great example of a listing. And not to embarrass you, Mike, but this is the ACI listing. And it really covers everything that they do with a great demo video and other information. So head on over there for leaders like ACI and other providers that you might need for your business. So with that, let’s talk get started. I want to remind you that we are recording the session and we will have an on-demand playback afterwards and we will send you an email. Do not be shy about asking questions, just use the chat or Q&A and we’ll be reviewing those and answer your questions. So with that, I’m going to hand the virtual microphone over to you, Mike, so you can take it from here.
Mike Rogers:
Hey. Thanks, Kathy. And thanks of course, to June and the rest of your team for pulling this together. Boy, it’s been a long year. We’ve had some great virtual events together and really looking forward to November in New York City with you and everybody because it’s long overdue. Thanks for pulling that together and thanks for pulling together today. I also like to thank our marketing team at ACI, Steve and Kristin and a whole bunch of people behind the scenes that have pulled this together. This is current content, not even something from early last year or even pre pandemic. This is recent data that hopefully will help everybody to learn and then act on their businesses accordingly.
Mike Rogers:
So what we’re going to talk about is we’re going to… I love the theme by the way. It’s pretty fun. Hats off to Steve Mounts for pulling that together. We’re going to try not to talk about too much pain, but we are going to talk a little bit of pain, right? Because payment does have an influence on your customers and your relationship with your customers. So let’s talk about where there are pain points and more importantly, some solutions around those pain points. So we’ll diagnose some problems, we’ll certainly talk about some remedies, we’ll get your input, but really looking forward to an interactive discussion. We should, if we do this right, leave at least 15 minutes, maybe 20 even, for Q&A, which really will help all of us. So thank you in advance for participating that way. And I know some questions will come in through the chat while I’m chatting.
Mike Rogers:
Okay. So I’d referenced research that ACI does. We do a whole bunch of research. It’s super important in general in changing environments like subscriptions, but also coming out of the pandemic, of course. So we do our annual ACI Speedpay Pulse study, which is across many consumers and many billers. We do YouGov studies and then really, we partner with MasterCard a lot to identify what’s going on in very specific marketplaces and how that impacts how we all do business. So thank you to all of those groups for working so closely with both our marketing team and our sales teams and product teams to deliver real-time information to us all.
Mike Rogers:
Okay. So all of that research is well over 300 pages of information. I will not get to 300 pages of information, more like 25 to 30. So what we have done is we’ve introduced at the ACI Worldwide website, an opportunity for you to drill down by segments in all of the research that we’ve done. Whether it’s by age, time period, vertical market, industry, sub-industry, et cetera. You can go around and play around with that tool to understand how consumers are feeling, how some of your peers in subscriptions are feeling, how some of your peers in the billing and payments world are feeling, to ultimately decide on how it impacts your business and your consumers.
Mike Rogers:
Okay. So we love research at ACI, but let’s remember the development part is actually more important and it’s actually harder, right? It’s one thing to learn about how we’re going to do business, another thing to apply it in our individual businesses. And we know it’s not a straight line. So if there’s anything that you pull out of today, it’s that when you’re selecting partners in anything you do, internal partners within your organizations, third party partners like ACI or others, just know that you want to set a goal from your research and really be ready for A/B testing that results. Maybe in what you’re not expecting, but will eventually take you down the path of success. And this always tells that true story. I can see your smile there, Kathy. You know what this feels like over this last year as well. Success has not been a straight line, has it?
Kathy Greenler:
It’s a journey. It’s absolutely a journey.
Mike Rogers:
Amen. All right. So let’s get to the research, talk a little bit about pain points and solutions. So I think this slide is fascinating because it shows the journey, speaking of, that we’ve been in even during the pandemic year. Early on in the year, the first half, we saw our subscriptions go up, which was unbelievably great for a lot of people that are listening today. And hopefully, you are on that growth side of the subscriptions world. But in the second half of the year, and we were all collectively talking about this, consumers started to pause a little bit. Maybe they oversubscribed early in the year because they were really locked down in quarantine or as you can see here, maybe they were tapping out at too many subscriptions and looking at their budgets relative to their income.
Mike Rogers:
All we know is that you know your business better than us. There was some growth hopefully for you, and now we’ve got to absorb that growth. We’ve got to work on retention, we’ve got to avoid churn, we’ve got to do everything we can to serve those customers so you retain them for your continued growth. That’s what we want to talk about today, is how billing and payments will impact your ability to retain these customers that grew a lot in the first half and started to flatten out here in the second half.
Mike Rogers:
So interestingly, if you look at it in total, subscriptions are down a little bit, but sharing cost is up. I think people are managing their budgets and that is not surprising. We see demand for shared payments continuing to rise with our solutions. And I would imagine you’re probably seeing the same in your business. So we need to make sure that we’re staying a step ahead of consumers to meet them where they want to meet, how they want to make payments. And this is one of those examples. It’s shared payments. We see that trend continuing to grow. And this one’s interesting to me. We do a lot of comparison of our billing portfolios. If you think traditional telecommunications, consumer finance utilities, government payments, the credit card payments, et cetera.
Mike Rogers:
And then if you look at subscription, subscriptions typically historically, has been very card centric. But what you’re seeing here is ACH is actually increasing. There’s a fine line. And we’ll talk a lot more about this during this call, but we love the idea of increasing ACH because of the lower cost, but not at the expense of creating exceptions that can impact churn or at a minimum cost, your additional cost per customer in terms of the cost of exceptions. So we want to monitor that really closely. Overall, card is still dominant in this space because for obvious reasons, we want a clean good funds payment so that payment experiences don’t get in the way of managing your subscription.
Mike Rogers:
Okay. So this is our first pain point discussion. I’m not wearing a hat. I don’t have a fever myself, but this does make me feel like sometimes I get a fever because things that you can control, you don’t want to create churn. And we believe payments should not be one of the things that causes churn. We think payment should be one of the things that avoids churn if we do it right. So things like expired payment methods really in 2021 just does not make any sense. As a payments industry, we can do better. For those of us that have been using account updater for the last year or so, my goodness, if you don’t have it, go to your provider and turn it on so that cards that expire, cards that have fraud and they are replaced, are replaced in your system without you even knowing. Because it’s that important for your customer to make sure they don’t have a problem with a payment that ultimately questions whether or not they want to continue their subscription. Let’s not let that happen.
Mike Rogers:
Some of these other things, payment processors, aren’t going to be involved in like forgot my password other than to say, you could very well be getting your authentication from your payment provider. And if as such, you want to make sure you are using biometrics, right? You want to make sure that you have the availability that they can use their thumb to be able to log in so that they can’t forget their password, right? So overall, we should be staying a step ahead of all of these issues, which can impact churn. Okay. So let’s do some diagnostics. Not a doctor, don’t play one on TV, just a payments guy for a very long [inaudible 00:14:05].
Mike Rogers:
All right. So this slide is so fun because it almost makes payments look like they’re really colorful and brilliant. When in fact this slide is actually telling a really sort of almost painful story about the challenges of payments as it affects your subscription business. I would think personally, that there would be other things at the top of the list besides lack of speed as a problem in subscriptions. But if you really actually drill down in consumer experience, and especially even during this last year of the pandemic. With more people going online to buy things and so forth, people expect speed from their service. I love my Capital One card, more importantly my Capital One alerts that actually tells me that the card has been charged when it may not have even received the receipt or the invoice or the… If I’m at a restaurant, I may not have even received it yet.
Mike Rogers:
This is terrible. We have got to make sure that the speed of payments in this business for your consumers is the speed that they would expect for everything they do in their life, which we all know they expect it on demand. Across all of the generations of people, speed can not be an issue for payments. It’s unacceptable at this point. Another key component is cost. So we have to balance cost, right? We just talked about it with ACH card. Card is used because it’s a good funds model with less exceptions. ACH is used because it’s lower cost, but it has higher exceptions. So we’re going to have to balance that out to make sure that we have the right experience for the right customers to make sure that you’re managing your growth and your churn.
Mike Rogers:
Honestly, the last two are benchmarks that we just as an industry have to continue to invest in. Systems integrations and security make or break how we do business together. Period. End of story. And all of your providers need to be up to speed in a way that’s not just what was last year, but the new compliance and regulation requirements of this year. The challenge of doing things in house is not to build something in house, but it’s to stay with the contemporary requirements for security, integrations and future enhancements roadmaps, if you will. And I think this is where a lot of times companies are really challenged to keep up with technology and security. We have got to do that as an industry and as partners, we need to do that to help you with that.
Mike Rogers:
Okay. So I covered this a little bit. Let’s just reemphasize the fact that I don’t… Cashflow is important. Your treasury folks that are out there, cashflow matters a lot. But at the end of the day, we’re not talking about faster payments just so that you can have the money in your bank. It’s really more about customer experience. It’s all we’re talking about here. The sooner that a payment is done, the sooner you can do fulfillment and the sooner the consumer can have the experience they’re looking for, which are your products and services. At the same time, as I mentioned, I love text alerts for getting a receipt. That’s how I manage my receipts. Everybody can manage them a little bit differently, but that payment receipt matters. You end up in billing probably more than subscriptions. A certain percentage of customers who stay with paper just because they want that receipt. I personally like to store receipts digitally, but some still store them offline. So let’s make sure that you can meet all of those customers in a place that they want to be met.
Mike Rogers:
So let’s dig a little bit further. This is not the pain points. This is part of the solution. So when we talk about real-time payments, again, there’s a value in treasury for sure. Want to keep your CFO happy. But really, the value is in parts that are actually not as obvious, which is that last point there on real-time payments, which is rich data. We don’t just want lower cost payments with less exceptions, we actually want smarter payments. Real-time payments will actually come with data that helps understand the nature of that payment and what somebody is actually paying for. If it’s a portion of a subscription, if it’s two subscriptions, a rich data file will be a key part of real-time payments going forward. We’re not there yet. We’re there in bank to bank, we’re they’re in business to business. And business to consumer, we’re not there yet, but it’s coming. And it will make your payments smarter than they are today, which will be good for your business.
Mike Rogers:
So this is exactly what I was talking about earlier. The good news is subscription’s really is not in the cash business. Cash is still prominent in billing, still prominent in some obviously, storefront business, et cetera. Checks are also dying, again, not a subscription issue. Card one to three days is really sort of unacceptable as industry, quite frankly. And more and more of our partners in HCI in particular are working on same day funding, worst case, next day funding. About one to three days, you should be looking around for a better solution, quite frankly. And then we talked about faster payments. Same day ACH is a good solution. I think it’s still being baked. And I say that with a lot of good friends at [inaudible 00:19:55]. I think they’re doing a great job, not only working on same day ACH, but the fed now solution is coming as well.
Mike Rogers:
But in the meantime, the people that have really moved ahead are the Zelle’s of the world and done most and so forth. We as consumers in peer-to-peer payments are getting used to that instantaneous sending money to friends and family. I have a funny experience. I don’t know if you guys have this, but I’ve got two teenage boys and we all have accounts at Wells Fargo. But when I pay them, I still pay them through Venmo because they love the Venmo experience. Somehow, if I just do a transfer from my bank account at Wells to their bank account at Wells, it’s not the same experience for them. It’s almost like I didn’t give them the money. Whereas they know with Venmo, they get the alert, they see the emojis. I don’t know. It’s just a better experience for them. Kathy, you’re laughing. You have the same experience? There you go.
Kathy Greenler:
Sorry, I was on mute. Absolutely. I mean, I’m a Venmo queen. I mean, with everything that we do, we’re using Venmo and the alerting is amazing and it’s real time as you mentioned.
Mike Rogers:
Yeah. So this is a great example where whenever you talk with your “payments provider,” you really should be talking about billing and payments. You should be talking about customer communications and payments. You should talking about alerting and payments. All things that affect your loyalty is really what your service provider should be talking to you about. And in your engagement with your customer or your member, those are the things that are actually going to separate your third party providers from some of the others who are maybe just transaction processors. It’s not just about the faster payment, it’s about the overall experience. And that’s what we’re hopefully bringing to our customers and our prospective customers.
Mike Rogers:
Okay. So let’s drill down a little bit more on the pains of card. I work just about every day with our partners at the card networks. It’s one of my favorite parts of the job and quite frankly, one of the harder parts of the job. The card networks are not in denial about the fact that they have some legacy processes and legacy rails with some legacy pricing that still is perceived as expensive. 2 or 3% of your revenues matters to your business. And so what we’re doing is working with all of the networks, both the legacy card networks, visa, MasterCard, Amex, Discover, et cetera, as well as some of the alternative payment methods and some of the payment methods coming like real-time payments we talked about to bring the cost of payments down, but do it smartly. Not just in a vacuum of trying to reduce cost because we know one thing. Even with real-time payments, it’s not really baked yet in how they’re going to handle exceptions.
Mike Rogers:
We think we have some solutions coming, but we know with the card based system, for example, the chargeback process while not great, it is tried and true and it’s actually pretty… gosh, darn good with very good reporting. That doesn’t exist in real-time payment check. Real-time payment is based on good funds, sorry, done. That’s a little bit different than a goods and services world that from time to time, bump is going to go the [inaudible 00:23:29] and we’re going to have exceptions processes built around it. So we’ll want to make sure that we’re managing the cost of payments. We’re also managing all things related to payments, whether it’s fulfillment exceptions, et cetera. Really, when we start talking about returns and errors, one of the things that drives me bananas as a consumer and then as a payments expert is the experience I just had last week regarding an oven I ordered. And the oven was delayed because there was delays with shipment from Italy.
Mike Rogers:
They didn’t tell me that when I was buying the oven. To the point where I had to cancel. And safe to say they took my money months ago and it was gone that day, right? But when they’re giving me my money back, it took them three days to give me my money back. That is so totally unacceptable. Even if you’re losing a customer, it’s a really bad idea as they’re walking out the door to kick them to the curb by making them wait for the money that they deserve back in the same real time that the money you took from them. We want to make sure as an industry that we don’t provide that experience to consumers. So you should be working with things like MasterCard Send and visa Direct and other ways in which to get the money back to the consumer real time.
Mike Rogers:
Guess what? That consumer, when they go to look at returning on a subscription or if it’s just a refund, now they’re going to look at that as a positive experience with your brand to say, “Wow, these guys are really good. They’re better than average compared to other providers in the space.” So this is something that’s ongoing. This changed, by the way. Visa Direct and MasterCard Send didn’t exist five years ago. If somebody is still sending a check back out as a refund, shame on that provider.
Mike Rogers:
So how do we optimize? One of the things that is actually happening today and it happened here in the US with regards to the Durbin Amendment some five to 10 years ago, is at least cost routing for pinless networks. The networks you see when you used to go to take cash out of your ATM continues to grow. And the pinless networks are less expensive than the traditional card networks. So if you’re not least cost routing, then you have solutions to your pain of the cost of payments that your provider should be helping you with. There’s no reason for a signature-based debit card you shouldn’t potentially be looking at routing via star nice pulse Excel, et cetera, in a way that will reduce your cost of accepting debit cards.
Mike Rogers:
I can tell you more about that as a follow-up with our team, if you want to either go through the Q&A or send us some request after this. And then finally, as far as the ACH goes, if you are using ACH, ACH account validation, which was supposed to start this month. It actually is starting this month, but there won’t be penalties until next year. You’ll want to make sure you’re doing ACH account validation. Let’s make sure it’s the right customer. Let’s make sure it’s the right account before you set up and have a bad experience day one with a new customer.
Mike Rogers:
So this is sort of just reemphasizing what I talked about before with one big caveat which is, when we talk about system integration as a pain point, make sure that your system integration is solid. It does you no good if you’ve got a third party that’s having troubles with posting payments to your system in real time or near real time, that’s inhibiting or causing problems to your customer relationship. And that’s an IT thing. And even though IT is buried in all of our organizations, there’s nothing more important than tight integrations that help fulfill a better consumer experience and a better partnering experience between you and your payment and billing providers.
Mike Rogers:
So what does that mean? Well, one of the biggest things that [inaudible 00:27:49] I’ve been in sales for 20 years, I’ve also been in product development and a founder of a company like many of you. One of the biggest challenges is if you’ve got a third party that’s got a great new solution for you, it doesn’t really matter what’s in the black box if you can’t implement it. So your partners need to make sure that just like open banking, just like partnering with salesforce or whatnot, that you have solutions that you’re buying that can be easy to turn on. Leveraging APIs, leveraging SDKs, any kind of developer portals or tools that help you turn on a solution. For you to be able to A/B test a solution, you want to make sure that you’re working with partners that can implement onboard in a way that helps you to move faster and keep up with others in the marketplace. That helps you to ultimately be able to have the best experience for your consumers.
Mike Rogers:
Again, I mentioned this earlier. I won’t talk too much about this pain, but listen, these are all things that need to be standard benchmark. Whether you’re doing RFPs, RFIs or just selecting a vendor, this is table stakes including by the way, fraud. Fraud needs to be baked into your payment solutions. It can be a standalone solution and an incremental additional solution, but if you’re not building fraud or payment intelligence tools into your payment solutions, then you’re probably either A, costing yourself dollars into an authorization rates or B, there’s dollars going out the door that shouldn’t be going out the door for fraud. But either one of those are bad outcomes for your business. Your payment provider needs to be coming to the table with a solution that helps you with both of those.
Mike Rogers:
All right. So we get our first poll and this answer may surprise you. I don’t know. How much of you know about all the idiosyncrasies of PCI? PCI continues to get more complex in managing card data. Let’s do a poll and find out. What do you think? Who is correct?
Kathy Greenler:
[inaudible 00:30:03].Mike Rogers:
And how many companies are compliant with PCI? Drum roll, please.
Kathy Greenler:
Drum roll, please. I love watching the back end because everybody’s entering and you can kind of see how the numbers change as everybody enters.
Mike Rogers:
I will say, this is a smart crowd, Kathy.
Kathy Greenler:
Is it? Okay.
Mike Rogers:
The answers are better than I would have expected.
Kathy Greenler:
Well, we knew they are very smart. Absolutely.
Mike Rogers:
There’re some realists out there in the [inaudible 00:30:35] world. Absolutely. Okay. Let’s take a-
Kathy Greenler:
[inaudible 00:30:41]. Do you want to end the poll and show everybody what we answered and what the right answer is?Mike Rogers:
I think it’s flattened out. Yeah, let’s do that.
Kathy Greenler:
Okay. Well, it looks like we have 44%, is the winning-
Mike Rogers:
Yeah. 44% is the top answer from the group. And the actual answer is… Drum roll.
Kathy Greenler:
All right.
Mike Rogers:
The actual answer is… No, hold on. I got to pull this off. Oh, you’ve got to stop sharing results. And let’s see if we can move forward.
Kathy Greenler:
So what’s the real results?
Mike Rogers:
I’m trying to push the slide down. This is like live TV. It’s good.
Kathy Greenler:
Right. I’m going to close out the poll. There we go.
Mike Rogers:
Yeah, that’d be great. There we go.
Kathy Greenler:
Yeah. There we go. The pole is closed. There we go.
Mike Rogers:
Okay. There we go. I didn’t want to give the answers-
Kathy Greenler:
So we have that everybody centered on about 44%.
Mike Rogers:
Yeah. And sadly-
Kathy Greenler:
Wow.
Mike Rogers:
… the peak was up there at 55% a few years back. But we’re down on the other side of this at 28% and I’ll give you a real good reason why. A couple things actually. With the increase in card-based payments in call centers, one of the more recent issue related to PCI, is when you take a phone payment, you’re actually recording a call to monitor your agents. But when you’re recording that call and if you’re taking a card payment, you are now out of PCI compliance. This is just one example. And you can imagine it’s hard enough when you’re in a call center. And now with agents at home, there’s lots of reasons that PCI has a problem in the pandemic. And this is before the pandemic. My gosh, I don’t know what the numbers are for 2020, but there’s incremental regulation that occurs with PCI and compliance in general. And it makes it more difficult to keep up with.
Mike Rogers:
Your partners need to help educate you and keep you in tune with how best to stay in compliance with PCI or maybe more importantly, have your third party who’s expert at PCI making sure they’re managing all of that for you so you can focus on your customers and your core business, not on the compliance of PCI. You’re always going to have an obligation as a provider for PCI, but you should have the right partner to make sure that they’re taking care of this for you. Anything else to add there, Kathy?
Kathy Greenler:
Yeah. I think we’re good. If anybody has any questions, please pop them in the Q&A, though. We’re getting some good questions, Mike, so I can’t wait to get to the Q&A at the end.
Mike Rogers:
All right. We’re almost there. We’re kind of on the home stretch. So there’s lots of ways to get ahead. That’s good news. I want to take this moment by the way, to thank our heroes on the front lines related to the pandemic, right? Whether it’s the folks that created the vaccines, my gosh, get us [inaudible 00:34:11] immunity as soon as possible. [inaudible 00:34:13] people that have been working in our hospitals and our healthcare system in general. They have been a heroes over the last year and thank goodness for that. So we’re not making light of healthcare and the pains of payments. It’s nothing compared to what we’ve all been through in the last year, but in our day jobs, payments and billing can be a pain and let’s make sure we’re working on that together.
Mike Rogers:
The cool thing is there’s lots of remedies. There’re really intelligent remedies here. Machine learning’s a huge part of our payment intelligence and fraud group. Like we said, it’s baked into what we do for payments. Love to talk to you about that a little bit more. Setting rules and testing those rules and profiling and so forth. These are all advanced intelligence solutions that really go way beyond processing the transaction. So let’s make sure that you’ve got the intelligent people. You may not have to have the MD, but you should have some smart people. Maybe some people with masters in analytics and statistics and so forth like we do, that are helping you solve these kinds of solutions.
Mike Rogers:
All right. Like I said, I’m on the home stretch, so this is really sort of a summary. It’s not like slow payments, integration, security, or expenses get in the way of growing your business. It was a great first half for many of you. Congratulations. Second half slowing a little bit. Let’s make sure all of these things are out of the way so you can absorb the business that you’ve taken on over the last year and continue to grow it this year. You should have the right partners in place, whether it’s PCI or other which… We love partnering with all of the players in the subscription space. Certainly, the billing platforms are huge part of who we work with personally. Partners like Kathy and all of the associations in the space looking out for your best interests and we’re here to help you with that as well. So let’s go to poll question number two. What is your biggest pain point in accepting payments?
Kathy Greenler:
Okay. So let’s launch that poll. Here you go, everybody. Let us know. And-
Mike Rogers:
Let’s see if the research fits this group.
Kathy Greenler:
Absolutely. Yeah, we have about half of everybody answer last time before the data started flattening out. Hopefully we can get everybody answering this time around. So what is your biggest pain points? Slow payments, payment expenses, poor integration or payment security? I’m still seeing some things move around, Mike, here.
Mike Rogers:
Yeah. We can give it a few more minutes. A few more seconds, I’m sorry. People are still answering. Again, I’m not pleasantly surprised. I’m happy that we have a very smart group that understands their business and understand that onboarding and integration is so key to working with your third party partners. And it is a very real pain point.
Kathy Greenler:
It is.
Mike Rogers:
Everybody is stuck in sort of dare I say, roadmap hell. So the more that you can avoid that with your partners [inaudible 00:37:54] solve for it in an efficient way is the right answer for all involved. The consumer, the subscription provider, the third party. Life is easier and more efficient for everybody with the right integration.
Kathy Greenler:
Okay, well, I propose we show the answer. So we’re now sharing the poll results. So we had 17% say slow payments, 38% payment expenses and almost 46% for integration. And payment and security is not an issue with this crowd.
Mike Rogers:
That’s great.
Kathy Greenler:
So if we can stop sharing and see what the poll results and see how that compares with our attendees today, that’d be great. I’ll close it out for you, Mike. There you go.
Mike Rogers:
Thank you. So we go back to the slide where we talked about APIs and SDKs and maybe more importantly, even pre-existing integrations with your billing platform or your system of record platform. Those are all things that are going to help with that core integration experience because we all know everybody’s resource light, everybody wish they had more resources for integrations, right? For growth map and so forth. So let’s not get in the way of that. It’s already challenging enough.
Kathy Greenler:
Okay. Let’s move on to our next slide.
Mike Rogers:
Okay. So if you could end the poll, that would be great.
Kathy Greenler:
I believe the poll is ended.
Mike Rogers:
Okay. Let’s see. There we go.
Kathy Greenler:
Here we go. Yeah.
Mike Rogers:
And guess what? We are done. I will hold off on talking about ACI. We’re a very large global provider of payments around the world. There’s lots to learn about ACI, but here’s what I would suggest. When you go to look at a research that Steve Mounts and Kristin team provided, that’s at the ACI Worldwide website, then you can take a look there and learn a little bit more about what we’re doing with our bank partners, our merchant subscription partners and our billing partners around the world. Because I’d really love to get this Q&A, Kathy.
Kathy Greenler:
Okay. Well, let’s move on to… Keep going. Yeah, other way. And there we go. If you want to move to the one with our faces on it.
Mike Rogers:
All right. There we are.
Kathy Greenler:
That way you get to stare at your face, but more importantly, if anybody wants to find your email. So if they need to reach out to you for any follow-up, they can grab that during the Q&A. Alrighty. So we do have some different questions here. And thank you everybody for your questions. Here’s one, the growth of ACH and debit cards is interesting. Are you also seeing more use of prepaid and one time use cards for initial subscription purchases?
Mike Rogers:
Oh, talk about pain points. We didn’t even bring that up. Prepaid cards are a challenge, especially gift cards, right? Non-reloadable cards are problematic in our business. Are we seeing an increase? No. Unfortunately, we’re also not seeing resolution handling exceptions with card networks. And we all know who the players are involved in issuing those cards. It’s just a challenge and it’s really too bad. I can tell you that make sure that whoever you work with has a great help desk that will fight for the right answers when we have problems with those kinds of cards. We’re not seeing a dramatic increase, no, but we are seeing more increase in prepaid solutions for things like telco and so forth. But that’s sort of prepaying the bill, not necessarily a prepaid card.
Kathy Greenler:
Can’t you just block those cards in the first place to avoid the problem?
Mike Rogers:
Yeah. But that goes against everything we talked about, which is any payment, every possibility. We don’t want to block, we want to problem solve. But being totally transparent, it’s still a challenge. It’s why we work directly with card networks. The challenge is oftentimes, it’s an issuer decision. They have their own rules about the use of those cards and that’s where it becomes problematic.
Kathy Greenler:
Okay. So I have a couple of other questions here. How do you receive all the funds into a single deposit, like you mentioned? How does that work?
Mike Rogers:
Well, there’s a food chain, right? There’s a long food chain of how the money moves. It depends on if you’re payment provider as a payment facilitator or not, or if you’re signing a direct agreement with your acquire, who the sponsor bank is and so forth. But ultimately, whoever’s doing your treasury management, you really do want to pre-negotiate the timing of those funds. Interestingly, what we like to do where we’re a payment facilitator and not just the payments gateway provider, let’s say, so we’re helping manage the money. We’ll do the auth, we’ll hold that, we’ll post to you, so that now it’s a good transaction to your business and your system.
Mike Rogers:
However, we may actually not move the money until the end of the day because you’re going to try to avoid exceptions. And the exception that happens most frequently in a given day is, I go to buy a widget or sign up for a subscription and then I talk about it with my wife. She goes and signs up for the same widget or subscription. Now we’ve basically signed up twice and now we’ve got an exception. And so, by not moving the money to later that day, it’s easier to just reverse that transaction than to reverse it all the way out of the money movement system.
Kathy Greenler:
Good point. Here’s a follow-up question. We currently record and retain calls in the call center for recurring payments signups. Our understanding is that we need to retain this for compliance with [inaudible 00:44:53] when ACH or debit is used as a payment method. Are you indicating that this is a conflict with PCI, DSS? And if so, how would you resolve the two different requirements?
Mike Rogers:
Great question. And I’m sorry I didn’t give the answer earlier. There are solutions in the marketplace which will digitize the entry of the card information. We partner with a company, [inaudible 00:45:22] who’s done a real nice job and partners with the telcos and so forth to provide the solution and companies like ACI, whereby the agent can stay on the phone, but not hear the digits. And the storage is done by the third party payment provider, ACI, so that there is not a PCI compliance issue. If you record the card information, even if… It’s long story, but yes, if you record the card information through your recordings for all the reasons that you described for compliance, that is a PCI violation.
Kathy Greenler:
Now, are there other reasons why PCI compliance is dropping so much?
Mike Rogers:
It’s complicated and I think it’s carrot or stick sort of experience. I think ultimately, we take PCI compliance as seriously as data security. I guess not everybody does, but ultimately there… If you don’t get past your attestation for PCI, your business can be shut down. Or more importantly, your payment acceptance of card payments can be shut down and that would be a problem for subscription [inaudible 00:46:45].
Kathy Greenler:
So a question here is on a slightly different topic. I would be interested in hearing more about preventing failed payments. So what are some of the best practices on the failed payments?
Mike Rogers:
Great question. Some of the best practices for enterprises, so think big tech, think Syntech, with literally not millions of customers, tens and even hundreds of millions of customers. They actually go as far as to set up different mids. What they would call a trusted mid, if you’ve heard that term. A tenured mid, a smart mid, where they actually group different segments of customers such that they change the rules for those transactions and potentially even push the payments through [inaudible 00:47:44] where effectively there’s maybe a debt to the consumer in order to retain that customer. And then it collect the funds in a separate route, whether it’s through a third party like a firm or other… to be able to retain that customer while they work on the exception. That’s one example. There’s others and I think probably the biggest one is optimizing your fraud or payment intelligence solutions, right? So that you’re not declining what could be good transactions because of MCC or other related issues.
Kathy Greenler:
Good points on that. Slightly related, but on the subject of fraud, here’s a question. How do you handle chargebacks? We’re seeing a spike in chargebacks and a drop in subscribers and are looking for ways to improve.
Mike Rogers:
Oh boy, that’s a double whammy. Is that two or three aspirins? First and foremost, this is where you really want to have the right partners. And really ultimately, all the way up to your acquiring partner, right? Because their tools and more importantly, their service support matters a lot. If were to do a poll with the satisfaction of providers with their acquiring partners, I think collectively as a group, it’s probably underperforming if I’m truthful, and part of it is customer service. So again, going back to the conversation, we talked about costs. Costs are one thing, but service support matters a lot, especially in exception and chargebacks. They are a very serious one. Chargebacks need to have a great reporting tool portal, need to have great intelligence around when to push back on chargebacks and when not to.
Mike Rogers:
God forbid, you need a partner that keeps you under 0.8%. If you’re anywhere close to there, you don’t want to get that letter from Visa or MasterCard. You don’t want to be on the naughty list. Though all of those things matter a lot while at the same time we’re trying to optimize authorizations to make sure that you’re not losing revenues in churn. So it’s a complex problem. I’ll finish with this. Know your customer matters there as well, especially in a subscriptions business. So the good news is chargebacks should be less of an issue and subscriptions relative to e-commerce in general.
Kathy Greenler:
Yeah. There’s a lot of best practices as it relates to even simple things like how your billing statement is presented to onboarding. And even when they’re making the initial order, that can potentially help along with these tools that Mike mentioned. So Mike-
Mike Rogers:
One last thing I’ll add is, I don’t think whether it’s fraud or chargeback management. One size fits all solutions are probably not the best solution, obviously depending on the size of your business. Having multiple layers of solutions could make one plus one equal three with resolutions like this. So we have our own chargeback solutions, but we also partner with leaders in the industry as well, who do nothing but chargebacks management. So don’t be afraid to use more than one provider in situations like this or with fraud or whatnot.
Kathy Greenler:
Thank you. Mike, we are getting to the top of the hour, so I want to make sure I leave any time for any final parting advice from you to everybody listening today as they’re looking back in their own organizations on potential pain.
Mike Rogers:
What I would say if I go back to the R&D slide, do your research, is great. But building up a practice of R&D such that you’re constantly testing, you’re doing A/B tests for… And whatever business challenges you’re trying to resolve including billing and payments, I think it’s super important because the ecosystem keeps changing. And if you’re used to being in an environment of change, it’s going to be easier for you to implement new solutions that help you grow your business, new solutions that help you manage risk and new solutions to help you maintain and grow your customer base and reduce churn. So creating a culture of change even though it’s hard, will make it easier for you to make the proper change down the road working with third parties or even your internal processes.
Kathy Greenler:
Great advice. I believe your last slide is pointing to that research just to remind everybody again.
Mike Rogers:
Now, well, wait a minute. We’ve got one more slide.
Kathy Greenler:
We do have one more slide. Our favorite slide.
Mike Rogers:
This is sort of me sucking up to Kathy. Now, we think ultimately, our challenges in payments are still nothing compared with the world in the pandemic and so forth. And great explorers who had much bigger challenges of captains going off to far off land. So enjoy the journey and be safe. Thank you all really, for participating in this today. We hope that the dialogue, this isn’t just a one-time conversation. I talked far too much today. I look forward to more Q&A with all of you. And like I said, go out and take a look at our ebook, go out and take a look at our research and happy to answer any questions for you down the road. Thank you, Kathy, again.
Kathy Greenler:
Oh, thank you, Mike. Great information. Thank you all for attending today. We know your time is valuable. If you have any questions, please do not hesitate to reach out. So thank you all. And until next time, have a great day.
