How to Overcome Subscription Billing Challenges: Payment Processing Edition

There are a lot of moving parts in a subscription business, and one of them is billing and payment processing. To do this successfully, you need both secure payment processing and the ability to handle the nuances that come with subscription billing. Read on to find out how:

Tip #1: Go beyond PCI compliance

Compliance with the “Payment Card Industry Data Security Standard,” or “PCI compliance” for short, is a must-have for online businesses. These are cardholder data protocols required by the major card issuers: Visa, MasterCard, American Express, Discover and JCB.

If a business wants to accept payment using any of these cards, PCI compliance standards must be met. PCI compliance requirements are periodically updated, but always have key concepts at the core of the standards. These include:

• Establishing and maintaining a secure network
• Regular system monitoring and testing
• Protocols for protecting cardholder data

Adhering to PCI compliance is necessary, but compliance is the bare minimum of security. Home Depot and Target were both PCI compliant when hackers targeted their POS systems with malware. The criminals successfully stole customer data, which left many customers wary of using a card at either store.

Security incidents like that are a logistical and PR nightmare. Once you’re PCI compliant, you can increase security by making sure your payment process avoids storing cardholder data at any point.

Having security safeguards in place is vital to creating a good relationship with your customers. However, implementing all of these measures can be difficult – especially for startups. This is where a third party subscription management tool can come in. Tools like this handle all of the work of staying up to date for you, so you get the benefits of additional security, without the extra work.

For example, Rebilly can accept the cardholder data sent through the shopper’s browser and create a unique token to send to the selling company. Using a unique token allows the company to keep basic customer data on file, without having credit card numbers accessible for hackers to steal. (You can read more about our payment features here.)

Tip #2: Create a seamless subscription process

Security protocols are important, and customers have become more and more aware of security risks over time. However, shoppers don’t usually think about security until something goes wrong or seems off while making a purchase. What’s more annoying is when a business can’t handle changes to subscription plans. This can include free trial periods, coupons, refunds or offering new, limited-time products.

You have a similar choice here as you do with the security, with three options:

1. Tackle building something yourself, which can be costly and difficult to manage
2. Use a tool meant for one-time purchases and modify it, which can require a lot of workarounds and sub-optimal customer experience
3. Use a subscription billing management tool to maintain, manage, and instantly update your customer accounts

Obviously, we’re going to recommend the third option. It might be tempting to use a general ecommerce tool and create workarounds to bill for subscriptions. But if you’re using a true subscription management tool, you can do things like:

• Process a refund without going through accounting first
• Give loyal customers a free month of the product or service with the press of a button
• Offer subscribed customers early bird access to a forthcoming product or subscription

Sophisticated software can also let you automatically do smart retries of payments and estimate card expiration dates, which helps you retain as many customers as possible. By contrast, many tools set up for one-time purchases (or with an additional subscription option that isn’t the forefront of their product) will retry payments just once on a predefined schedule, and then the customer is lost.

Being able to do all of this helps you reduce churn and increase your customer LTV, because your customers will be more engaged and satisfied.

And on your end, the ability to manage all of these changes through one dashboard keeps changes from becoming lost in the shuffle between departments.

Want to learn more about what to look for in a subscription billing tool?

Our free guide walks you through everything you need to know, with a bonus feature checklist to boot: