Best Practices for Payment Processing with Subscription-Based Business Models

A man talking on the phone while holding his credit card and using a subscription business model on his laptop

If you run a subscription business model, your business’s success depends on smooth payment processing for both you and your customers. A lot more goes into payment processing than just collecting a customer’s credit card number. 

Here, we will walk through the subscription business model industry’s best practices for an easy and safe payment processing system.

Make Customer Security a Priority

With a recurring billing system, it’s important to make sure that security in your payment gateway and processor is one of your top priorities, especially when a card won’t be present at every transaction. Not only will you need to comply with all PCI standards, but your customer base and business reputation are on the line. An important way to securely store customer data is to “tokenize” the data to prevent it from being compromised, and securely store customer and card info with a payment gateway. 

Choose a Reputable Payment Gateway

Important customer data is stored in a payment gateway that can communicate with a payment processor to carry out a transaction between your merchant account and a customer’s bank account or credit card lender. 

Payment gateways like PayPal, Stripe, and Braintree are reputable among subscription e-commerce platforms and take the responsibility of PCI compliance and securely storing customer data to provide you and your customers with a seamless and safe checkout experience. 

Enable Fraud Detection Tools

Another part of customer security is making sure your subscription e-commerce platform is monitoring any potential fraudulent activity and putting security measures in place. In addition to securing customer data in a payment gateway, you can also employ additional tools, such as requiring a billing address and a CVV, tracking customer habits and collecting behavioral analytics, and even cross-channel monitoring for any suspicious activity. 

Remember that it’s a delicate balance between using some fraud detection tools and still having an enjoyable user experience on your website, so be as safe as you can without completely disrupting and turning away customers. 

Reduce the Risk of Declined Charges

An important part of payment processing is making sure there are payments to process in the first place. Keeping customers happy and informed is an important part of making sure your subscription-based business model gets paid. 

Some best practices in this area include:

  • Be transparent about your subscription in the first place so that customers know what they are signing up for.
  • Notify customers of the upcoming billing cycle days in advance.
  • Offer a grace period. 
  • Try to contact a customer individually if payments keep getting declined.
  • Use Account Updaters to automatically update customers’ out-of-date cards to their new information. These services are often offered by credit card companies. 
  • Offer flexible payment plans, such as paying on a customer-chosen day of the month, splitting the payment into smaller payments throughout the billing cycle, or offering pauses on subscription plans. 
  • In addition to payment plans, you can also offer multiple payment options, such as digital wallets, to allow customers the flexibility to pay in the way that is best suited for them. 

Payment Plugins Built for Your Business

When it comes to a payment processing system, one of the most important things you can do is to choose the right payment gateway plugin for your website. 

Payment Plugins is dedicated to creating well-structured plugins written with security and scalability in mind. Quality code in a payment plugin allows your e-commerce platform to operate at its highest level and can adapt as your company grows and expands. Our developers create with the future in mind so that your website can keep up with your ideas and visions for your company. 

We’ve partnered with the best in the business, Stripe, PayPal, and Braintree, to serve your business in its own unique way. 

Don’t let vulnerable plugins put your business or your customers at risk. Download our highly rated plugins and let us do the hard work for you. 

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