When you’re evaluating payment processing solutions, one of the most important things to consider is whether the payment solution has the features your customers want and need. For example, newer payment technology can address the merchant pain point of dealing with the cost and time associated with declined transactions from outdated cards. Account Updater, which automatically updates cards on file, can add significant value to the total solution you provide your clients.
Marci Gagnon, VP of strategic alliances for Qualpay, says account updater functionality can benefit any businesses that offer monthly payment plans or keeps cards on file for future purchases. It’s a useful feature for businesses in verticals ranging from clubs, gyms retailers, and service providers to nonprofits that accept donations on a recurring basis.
Why Cards Expire
Gagnon explains that card expirations are a reality that merchants need to manage. Cards expire for several reasons:
- Cards are periodically replaced since they can deteriorate with use.
- Following a data breach that put an account at risk, the issuer may send a new card.
- A card may be lost or stolen, so a new card is issued.
- Cards are sometimes reissued to reflect new issuer branding or new payment technology.
What Happens When a Merchant Doesn’t Update Card Information
If a merchant tries to complete a transaction with an expired card, the transaction will be declined, but the merchant must still pay an authorization fee. Gagnon points out that the fee for one authorization may only be a few cents, but if a significant percentage of cards on files are declined, the costs to the merchant will add up.
Authorization fees are only a part of the cost associated with outdated card information. The merchant also needs to spend time and resources reaching out to customers for updated card data, which can total hours each week. Qualpay sees an average of a 30 percent annual update rate with its customers.
The Benefits of Account Updater
Account Updater provides merchants with additional benefits, including preventing interruptions in service. “Merchants are not only losing money on declined transactions, but they’re also losing income until that card is updated,” Gagnon explains. “If the merchant forecasted that revenue for the month, it could create a budget problem.”
She adds that automatically updating card information also avoids planting a seed of doubt in the customer’s mind about whether they need or want to continue a subscription or service. She says, “Customers may ask themselves if they want to let that gym membership expire. It’s something customers may not have thought about until they received that notice that they need to update their cards.” With Account Updater, data is updated at the acquirer level, and there’s no need for the consumer to interact with the account.
Gagnon adds that using Account Updater is also a good security practice. “It’s common business sense,” she says. “Even expired cards are still in PCI scope. If there’s a data breach, you’re still responsible. It’s a good idea to perform sanitation of accounts once in a while.”
Account Updater Options for ISVs
As you evaluate payment solutions, you’ll find that Account Updater can work in a few different ways:
- Soft declines. The merchant can pull accounts with expired card information once each month and then bill again.
- Update any expired cards on file. The merchant periodically goes through all payment information on file and updates expired cards or reviews card data as needed, enabling more control of the process.
- Real-time Account Updater. When a merchant has a transaction declined, the Account Updater will provide updated information if available.
When you add a payment solution with this feature to the application you are providing your customers, you also have options for reporting. Gagnon says if you’re using a dashboard, you can send API updates to update card tokens and send a report to the merchant. You can also send the merchant a report on which cards were updated and allow them to update the customer account information themselves.
Gagnon points out that 90 percent of all Visa cards participate in Account Updater programs, and although there is a fee, its value outweighs the cost. “The costs of not updating cards – and of losing customers – can be significant. It’s a smart decision to use it,” she concludes. 
