Critical rules changes for credit card processing, especially recurring billing, will impact business profits and chargeback risk effective October 2017. Simply copying what other big SaaS businesses are doing successfully is not good enough. Everyone needs to make opt-in updates to comply, and EMV chip card acceptance is a good example of how even big companies can takes months or years to change.
Critical SaaS recurring billing credit card processing rules past, present and future:
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- To validate a card and create a token for future purchases, perform a Zero Dollar Authorization. There’s a procedure, including using recurring indicator, and a transaction fee for this. If the solution you’re looking at suggests a $1 authorization, that’s because the payment gateway, and or the implementation, are out of date and don’t support current requirements. Run!
- The sales receipt must include phrase “recurring transaction”, frequency of the charges, and the period of time agreed to.
- Cardholder opt-in record. Rules may vary by each card brand; following Visa requirements is a good practice. For example, read Visa Stored Credential Transaction Mandates and also Visa Core Rules. One of the new requirements is specifying how the Cardholder will be notified of any changes to the agreement. The significance of new mandates is huge, and non-compliance will result in higher fees, penalties, reduced sale approvals and chargebacks.
Payment gateway selection directly impacts profits, risk, and your customer buying experience. Lots of developers integrate one or two of the oldest payment gateways because they’re “reliable” and familiar. True, but, this could cost your company it’s path to profitability and even existence. Any WordPress developer knows technology and implementation of technology changes. It’s constant. Before selecting a payment gateway for a SaaS startup, ask these questions:
- How will it help with new Visa Stored Credential Mandates?
- Does it support 3-D Secure cardholder authentication?
- How will it help with account updating for expiration and replacement cards?
- What type of digital record is created at the time of customer opt-in to agreement, how is it retrieved, and how long is it retained?
- Does it support authorization reversals?
- Does it level 3 processing for commercial cards (if applicable to business type)?
- If I change banks or payment processors, how will it affect my customers? My business?
TIP: Most payment gateways are reliable; level 3 processing, and 3-D Secure support are starting points to reduce the list of options. Need help to get compliant? Contact Christine Speedy to learn more about solutions for your business that are quick and easy to adopt, increasing efficiency and growing profits virtually overnight.
