Editor's Note: This article was published in the July/August issue of Connection, a Chase Paymentech Solutions client newsletter; reprinted with permission. © Chase Card Services. All rights reserved.
When businesses accept recurring payments, customer relationships last well beyond a single transaction. For these merchants and billers, it's critical to utilize payment tools that can minimize billing disruptions and maintain service continuity. This can reduce processing costs, maximize revenues and strengthen customer satisfaction.
The merchant advantages are clear: predictable cash flow, lower costs and improved customer retention. The consumer comes out ahead, too: less time and effort spent on bill payments and no service disruptions resulting from past due payments.
Electronic bill payments have multiplied over the past several years, and that growth is predicted to continue. Aite Group LLC has forecast that over 5.6 billion bills will be paid online this year, growing to over 6.3 billion in 2013. Currently, over half of all bills are paid electronically, with fewer and fewer check and cash payments occurring every year.
Merchants can take advantage of this trend by not only offering online payments, but by adding a recurring payments program. Those that already offer a recurring option should look for ways to enhance and improve their program.
Realizing the benefits of recurring payments requires careful planning and execution. Following are common steps merchants can take to optimize their program.
2. Make the process easy: Remove any extra steps or roadblocks in the set up process that could lead to customer frustration, preventing the completion of enrollment. Make sure that enrolling with a particular payment method is not comparably difficult. It's important to gather all relevant customer payment information up front in order to ensure the transactions continue to process correctly and at the lowest possible cost.
3. Expand the program to as many qualified customers as possible: Review and measure enrollment programs to identify the approach and messaging that resonate best with your customer base. Continue to test and use the lessons learned to promote the program through regular customer communications.
4. Offer a wide range of payment methods: Adding methods of payment beyond debit and credit can provide benefits to both the merchant and the customer. Many consumers prefer products such as e-check or other alternative payment methods. Offering additional payment choices keeps customers happy and merchants can realize savings when they offer lower cost options such as e-check and PIN-less debit.
5. Exploit features offered by the payment brands to keep costs low: Some businesses, such as property managers, and cable, utility and telecom providers may qualify for special programs and pricing. Regardless of the merchant type, appropriate use of Address Verification Service (AVS) and the Card Security Verification Value (CVV, CVV2 and CID) can ensure that transactions qualify for the lowest possible rates, as well as avoiding unnecessary charges for incorrect use of these features. Merchants should check with their processing partner to see if they qualify for these or other programs.
6. Use advanced payment features to optimize program efficiency: Merchants can greatly improve efficiency and reduce acceptance costs by utilizing advanced payment features offered by their payment processor. An Account Updater function automatically provides merchants with updated card information preventing payments disruption due to expired cards and for other account changes.
Authorization Recycling allows merchants to leverage transaction information to make informed decisions regarding if and when to make another attempt to authorize a transaction.
7. Keep it secure: Leverage payment gateway functionality to enhance security, prevent fraud and further lower costs. Employ advanced tokenization technology that can help eliminate the need to store sensitive cardholder data, reducing the risk of a compromise and potentially ease Payment Card Industry Data Security Standard compliance burdens.
Working with the right payments partner is critical. Merchants should seek out a provider that not only offers expertise in recurring payments, but also has the necessary tools, technology and resources to create the best possible solution. 
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