Make Recurring Payments Profitable & Risk-Free With Automatic Card Updater

The Unstoppable Rise of the Subscription Economy 

Between 2012 and 2021, the global subscription economy grew by more than 435%. The growth peaked at the height of the pandemic, but the overall trend was already in place much earlier.

In a recent study, we found that convenience is the primary driver in consumer payment choice. Statista’s research shows that 51% of consumers subscribe for that reason alone, while 42% subscribe because it helps them maintain a consistent routine — another form of convenience.

Recurring subscriptions offer sellers more predictable revenue than one-time payments, making it easier to predict future growth. 

Customers who subscribe generally spend more than those who don’t. This is backed by recent research from Stanford that found, on average, businesses enjoy 85% higher revenues when customers are subscribed and not making active payment decisions each month. At the top end, subscriptions drive 200% higher revenue.

With money at stake for merchants (and such wide acceptance from consumers), the subscription model is set to continue growing, with the market hitting as much as $1.5 trillion by 2025, according to some estimates.

How Subscriptions Impact Payment Processing

The recurring nature of subscriptions complicates the payment process. To be worthwhile, a subscription must reliably renew each period. Otherwise, customers lose the convenience they desire, and merchants lose out on recurring revenue. However, automatic renewal requires an automatic payment, which traditionally meant merchants would have to store sensitive customer card information themselves.

Unfortunately, self-stored card data creates risk for merchants in two ways. First, card information is a high-value target for cybercriminals, and storing it exposes a merchant to elevated cyberattack risk. With the average cost of a data breach now at almost $4.5 million USD, that’s a potentially expensive risk to take. Additional cyberattack risk also means merchants have increased compliance requirements under the Payment Card Industry Data Security Standard (PCI-DSS).

Secondly, merchants have to worry about undetected payment failure when cards expire. Customers who make an active payment will receive a notice if it fails. This allows them to correct the error or use another card. With automatically recurring payments, a customer with outdated card information could lose access to services without realizing or understanding why. That damages the customer’s experience and requires the merchant to chase down a payment.

Putting Subscription and Recurring Payments on Autopilot

Helping merchants navigate these risks is the best way to stay ahead of evolving preferences. Merchants don’t want to worry about managing subscription payments and mitigating data risks — they want to focus on their business.

Luckily, providers can offer value-added services that eliminate the primary risks involved in recurring subscription payments. That simultaneously makes merchants’ lives easier and opens new revenue channels.

Using Tokenization and Off-Site Storage to Minimize Cyber Risk

The first value-added service payment providers can offer merchants is off-site card data storage. Advanced data tokenization eliminates the need for a customer’s sensitive information to touch the merchant’s environment. Instead, the merchant can use a secure token to access card information stored off-site by a third party.

Since the actual card data isn’t stored or seen by the merchant, they are no longer liable. Even if a cybercriminal stole the token, they couldn’t see detailed card information, making it worthless. Tokenization frees the merchant from heightened cyber risks and tighter compliance requirements without impacting their ability to take automatic payments.

Automatically Updating Card Information to Keep Payments Flowing

Some consumers view card expiry as a passive way to unsubscribe. In most cases, though, failed payments inconvenience customers who want to keep their subscriptions active. Automatic card updating provides merchants with a seamless way to maintain current card information. This ensures uninterrupted revenue flow and enhances the overall experience for end customers.

Automatic updaters enable merchants to refresh their subscribers’ card information using lists published by the major card networks like Visa and Mastercard. Rather than chasing after delinquent accounts and expired cards, merchants can automatically run periodic scans on their subscriber lists to update any expired cards. This way, subscribers enjoy uninterrupted service, and merchants enjoy the uninterrupted revenue boost that comes when customers don’t have to make an active purchase decision.

Partner with NMI for Easy, Secure Recurring Payments

NMI offers a complete suite of omnichannel payment solutions designed to cover all of a merchant’s needs, including subscriptions. Our industry-leading gateway enables merchants to easily sell subscriptions online or through their software. We also offer value-added services that mitigate risks and make recurring payments frictionless.

NMI Customer Vault uses advanced tokenization to allow merchants to transact with ease while keeping them walled off from sensitive credit card data. Merchants can enjoy the benefits of stored credit cards, including recurring subscription payments and one-click checkouts, without the elevated risk or compliance burden.

NMI Automatic Card Updater taps into the card networks and automatically refreshes expired payment data for merchants. Automatic Card Updater can be used as a standalone service to update a merchant’s self-stored payment data, or it can be plugged into NMI Customer Vault for ultimate subscription safety and convenience.

To find out more about how you can offer your merchants better subscription and recurring payment services, reach out to a member of our team.