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4 key considerations to minimize card reissuance breakage on recurring payments

Whether it's per year, per month, or per click, the so-called “subscription economy” has moved payments well beyond simple transactions. Recurring payments for utility bills, music, movies, subscription boxes, and other popular services rely on valid consumer accounts. Most often, these accounts are attached to a customer’s credit or debit card.  

Since account numbers associated with credit and debit cards are updated frequently, having the right customer data can mean the difference between retention and attrition. And, as more cards are updated for more reasons ranging from card replacements following data thefts to simple account updates, it's important to know the factors that can keep your recurring business healthy, online and offline.   

You don't have to look any further than the mass-scale card reissuance associated with the EMV rollout in the US that began in anticipation of the fraud liability shift on October 1, 2015. There’s a lot more chip cards in circulation today− and consumers are using them. According to EMVCo, as of Q4 2018, 53.52% of card present transactions in the US were made with chip cards.

As EMV-related issuance continued, reports broke in the media that some businesses were experiencing breakage in recurring payments believed to be associated with the effort. So with the EMV scale reissuance as a milestone, what should you be considering? 

1. The key facts about EMV (chip-and-pin) and card reissuance

  • Oct. 1, 2015, was the target date for banks to reissue credit and debit cards with new embedded EMV chips
  • As of 2018, 842M EMV chip cards have been deployed in the US, with a 60.7% adoption rate 
  • EMV is designed to stop fraud at the physical point of sale. It does not prevent card-not-present (CNP) fraud
  • Mass-scale card reissuance, including that associated with EMV, may have implications for any recurring business, and it's time for a watchful eye  

2. How EMV card reissuance impacts recurring payments, especially for online and other card-not-present payments

  • When banks reissue cards to consumers, the new cards have new expiration dates or new account numbers, and in some cases, both, as well as a new Card Verification Value (CVV)
  • Transactions that are processed without this updated information are likely to be declined
  • Due to the extraordinary volume of reissued cards, your business is at higher-than-normal risk of experiencing damaging involuntary churn

3. When you need to take action

  • If you haven’t already taken action to address this issue, you need to do so immediately
  • If you aren’t using some type of account updating service or contacting customers to obtain new card data, you could already be experiencing higher churn rates

4. What actions to take

  • If you're not already using account updating solutions for Visa, Mastercard, and Discover, now’s the time to start
  • If you accept American Express cards, sign up for their Card Refresher Service
  • Take advantage of advanced updating and recovery solutions that help ensure updated card information is being submitted for payments. Some have automated capabilities that shift card information maintenance to the provider, helping to eliminate card exposure and optimize authorization approval rates.
  • Since some cards issued by banks don’t participate in Visa or Mastercard’s account updating services, focus your customer outreach efforts on cards issued by non-participating banks. Ask your payments provider to help you identify non-participating banks.

Reach out to us to learn more about Worldpay’s account updating, recycling, and recovery services to help recurring, subscription, and one-time billing in order to turn authorization declines into approvals.