Common sense tips for recurring credit card payments

05Jul12

After working through a series of rather frustrating issues with one of our main phone providers, I received another nasty surprise from telco land. One of our secondary providers sent an email saying that our credit card was declined, and that our account had been suspended as a result of the failed payment.

Since I knew that there was nothing wrong with the card or the available credit line, I called the vendor to see what was going on. They tried the credit card again and it went through fine, and our access to the account was restored. A few days later, the exact same issue arose with another one of our accounts at that company, and we had to repeat the idiotic process of calling just to ask them to try again.

From talking to their staff, I learned that they only try a credit card once before turning off an account. They don’t attempt to try it again, and they don’t make any allowance for issues on their end that might cause a charge to be declined. Obviously, this approach is quite problematic.

What’s the solution? Just use a few common sense rules when processing your customers’ recurring credit card payments:

– If the card is declined the first time, be sure to retry it at least once more. Ideally, the initial retry would occur on the same day, with a subsequent attempt made the following day.

– If a large number of cards across multiple customer accounts are getting declined (which was actually the situation with our vendor), make it a top priority to see if an error in your own systems or at your banking partner is causing the problems.

– If there aren’t any widespread issues with processing credit card charges, and a particular customer’s card keeps getting declined after several retries, then notify the customer and give them a chance to correct the problem. Don’t just turn off their account and notify them after the fact. Instead, provide a reasonable grace period so they can take action before having their service turned off.

Taken together, these tips seem obvious. However, as my experience showed, at least one company — and probably many more — isn’t using this type of common sense when it comes to their recurring credit card payments. And that’s a shame, since adopting these recommendations would make life easier for customers, while driving improved company performance in the form of better collection rates and more renewals.



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