Credit Card Decline Management: A Massive Threat to All Recurring Revenue Businesses
Imagine you are a business owner with 500 customers that you bill $100 per month on a recurring basis. Your business runs and plans based on $50,000 per month coming in the door on a regular basis. It took a long time and a lot of work to get to the point where your business generates that amount of reliable predictable income. You pay salaries, rent, plan development, and manage marketing campaigns ALL around that recurring revenue.
Now imagine that 15% of that revenue, or $7,500 per month, goes uncollected — and not because your clients don’t want to pay you.
What’s the problem? Credit card billing declines
Credit card decline rates are increasingly becoming a massive challenge for subscription/recurring billing merchants. Fraud, reissued cards, EMV (chipped) cards and lost or stolen cards all contribute to declines on recurring payments. You have likely been a victim of credit card hacking at Target, Home Depot or potentially many other businesses.
Some statistics:*
- On average, 15% of recurring credit card payments are declined (with some industries exceeding 30% decline rates)
- 30% of all credit cards are re-issued each year
- 1.5 billion EMV chip cards were issued in 2015 and 2016
- As of fall 2017 only 55% of payments were made via chip cards leaving many more to be issued
- There is an approximate 5% success rates in obtaining new information from customers on the first attempt after a card is declined