Posted by tina on Nov 28, 2013

 

recurring payments

How to Avoid Recurring Billing Chargebacks 

The recurring billing business model is one of the best innovations within the ecommerce industry.  

Properly implemented, recurring billing

  • Stabilizes cash flow
  • Increases lifetime value of customers
  • Convenient for customers
  • "Set it & forget it" automates payments

Yet, before implementing recurring payments or subscription billing models, be sure you have the basics in place to prevent chargebacks.  

Quick Glance at Recurring Billing

Widely known benefits of recurring billing include enhanced customer retention, easier collection of fees, and additional recurring revenue. An Inc.com article about recurring payments describes some other, less obvious, but truly essential advantages of this business model.

Businesses use subscription billing or recurring payment business models experience fast month-on-month growth.  Recurring income protects you from the ups and downs of the marketplace. And you can use the tools specific to the business model in order to gain a better understanding of what your customers want.  

What is the Risk in Recurring Payments?  

It is necessary to fully understand your risk.  Recurring and subscription billing has to be properly manged to mitigate risk.   

Chargebacks can never 100% eliminated.  Your goal is to prevent and control chargebacks as much as possible.  Which protects your payment processing accounts.  And helps your business grow.   

There will always be customers that decide not to use a service after the recurring payment has already been processed. Or those who do not understand the payment process and were aware (or claim they were unaware) of the recurring nature of the transaction.

Naturally, good customer service goes a long way in preventing chargebacks.  For instance, making it easy for customers to cancel.

Still, some customers never give you a chance to work with them.  Instead, they simply call their card issuing bank and initiate a chargeback.  

You'll never be completely clear of risk.  All you can do is manage it the best you can.  

8 Quick Ways to Reduce Chargebacks

Customers who are well informed are less likely to resort to chargebacks.  Efficient communication can work wonders when it comes to preventing chargebacks for recurring payments.

Here's some quick tips that can be remarkably effective in preventing chargebacks.  

  • If there is a trial period, indicate all terms and conditions prominently on the checkout page. Don't hide terms in the small print at the bottom of the page. Be transparent with your customers.  
  • Have a clear, easily accessible refund and cancellation policy. If the customer wishes to cancel a subscription, let them do so without hassle.
  • Indicate how cancellations can be handled online.  Provide multiple contact options, at a minimum email and phone number.    
  • If you offer 24/7 customer service, let your customers know. Otherwise, prominently display your hours of service, including the time zone in which you are located.  
  • It is not uncommon for customers to forget about subscriptions that are due every three or six months. Sending a notification prior to the transaction is prudent. Customers who want to continue the service do nothing. Those who want to cancel have the opportunity to do so.  
  • Make it easy for customers to obtain refunds. In most cases, you're best off simply initiating a refund and cancelling the service instead of fighting a chargeback. This is particularly true for smaller ticket sizes. Early warning systems can be a big help.  
  • Naturally, be sure your website includes all necessary information regarding the billing plans or subscription rates.  Let customers know exactly what is included in all the plans. Provide details on length of subscription, renewals, and cancellation policy.  
  • If a customer complains, communication can often solve the issue before it turns into a costly chargeback for you. Encourage excellent communication skills between your customer service staff and your customers. Empower your customer service agents. Let your customers know you care about them. And accommodate their requests wherever reasonably possible.  

Conclusion

Recurring payments and subscription billing business models are on an upward trend.  As cloud computing, SaaS payments, online entertainment, and the digital world continue to soar, opportunities for recurring payments and subscription billing models are endless.

Offering superb customer service to your customers is one of the best ways to mitigate the risk of chargebacks.  Top-notch customer service is your first line of defense in preventing chargebacks.  

How are you protecting your business from recurring billing chargebacks?  

Contact info@paynetsecure.net today.