1. Recurring Payments Tools of the Trade
Brief introductions by each
Rhiannon Herrmann
SVP, Operations
Trevor Nies
Sr. Director, Payments, Risk Ops & BI

2. Before We Start…Show of Hands -
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Before We Start…Show of Hands -
How many of you belong to a gym?
Rhiannon
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3. Before We Start…Show of Hands -
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Before We Start…Show of Hands -
...or watch movies online?
Rhiannon
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4. Before We Start…Show of Hands -
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Before We Start…Show of Hands -
…or maybe use one of these services?
Rhiannon
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5. Congrats! You are making a recurring payment!
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Congrats!
You are making a recurring payment!
…or as some call it, paying a subscription.
Rhiannon
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6. A Recurring Payment is -
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A Recurring Payment is -
A transaction that is charged to a customer for:
Ongoing subscription
Membership
Recurring Shipments of Goods/Services
A transaction that is charged to a customer for an ongoing subscription, membership, or the recurring shipment of goods.
A recurring transaction is often set up when you subscribe to a product that you will receive on a periodic basis.
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7. Challenges Payment method no longer viable Expired Card Lost/Stolen
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Challenges
Payment method no longer viable
Expired
Card Lost/Stolen
Customer not present
No CVV available
Trevor
No 3DS capability
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8. Microsoft sees a 50% recovery rate by recycling charges!
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Opportunity $
Microsoft sees a 50% recovery rate by recycling charges!  
Trevor
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9. Strategies Many merchants manage recycling themselves
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Strategies
Many merchants manage recycling themselves
Services also available from Acquirers and 3rd Party vendors
Recycle strategies vary
Predetermined frequencies (3-3-3 or 5-5-5)
Different days of week/time of day
Only certain days of week/days of month
Trevor
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10. Day of the Month Affects Everything
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Day of the Month Affects Everything
Beginning of the Month: Lowest Decline Rate
Middle of Month: Lowest Decline Rate
End of the Month: Lowest Decline Rate
Trevor
Source: Adyen
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11. Testing: A Case of the Fridays
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Testing: A Case of the Fridays
First Friday attempt: nothing different
Second attempt: Friday clear winner
Trevor
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12. Your New Best Friend: Account Updater
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Your New Best Friend: Account Updater
This is a “must have” $
Provides updated account info for major card networks including
New account number
New expiration date(s)
Real-Time updates (Visa)
AMEX “Card Refresher”
Merchants send registry file
Monitors & sends electronic updates
Rhiannon
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13. Account Updater: Behind the Scenes
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Account Updater: Behind the Scenes
Proactive Accounts:
Requests made several days in advance of a customer billing event
If new card data available – merchant updates customer record prior to attempting the billing event
Reactive Accounts:
Requests sent after failed billing attempt
If new card data available – merchant will update the customer record before second attempt
Rhiannon
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14. Reactive Example Work Flow
Customer is set to bill
Customer transaction sent to acquirer for processing
Transaction Approved?
<YES> Update transaction in system with 'Approved’
<NO> AU Engine Update Requests Sent Daily
Picks up decline records at first attempt; sends to acquirer requesting update.
Acquirer provides updates for records (if any)
Update Available?
<YES> Engine processes responses and updates account info in database. System will continue to bill as per recycling policy.
AU Engine Response Received Daily
Rhiannon
<NO> System will continue to bill as per recycling policy
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15. Review Transactions Check details small tweaks = large impacts
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Review Transactions
Check details small tweaks = large impacts
Work with acquirer to understand ins/outs of authorizations
Transitioned acquirers?
Get into the details to learn nuances (small code changes = negative approval rates)
Rhiannon
Recurring merchants passing “recurring” in transactions
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16. Recurring Flag: a Cautionary Tale
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Recurring Flag: a Cautionary Tale
After hearing this would improve our authorization rates several years ago, we made the change from Ecommerce to Recurring Overall, we saw an improvement.
But later, we noticed that the very first Billing Event for our customers, had actually seen a significant drop.
Rhiannon
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17. Payment Mix Types: Watch and Learn
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Payment Mix Types: Watch and Learn
Mix will affect transaction approval rates
Learn your historical mix of debit, credit, & prepaid
Monitor and track by channel & client
Trevor
Learn authorization declines by payment type
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18. Payment Mix Key: 9/4/2019 11:47 AM Trevor Payment Instrument Mix:
Net Approval Rate:
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19. A story about whether to accept prepaid cards…
37% bank approved
63% bank declined
18% Retry
4% bank approved
14% bank declined
Subs
Purchase
Allow Prepaid Cards
10% retail
Reject Prepaid Cards
27% Retry
22% Try with prepaid
5% Try with other PIs
2.5% bank declined
2.5% bank approved
24% retail
Trevor
5 months later,
active sub user
rate: 25%
5 months later, active sub user
rate: 3%
5 months later,
active sub user
rate: 7%
5 months later, active sub user rate: 16%
5 months later, active sub user
rate: 2%
Subs
Renewals
Remained Online and Retail Customers: ~35%
Remained Online and Retail Customers: ~18%

20. Emails Hi Trevor, Communicate
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Communicate
Before the customer’s next charge if card is expired
After the first bank decline and potentially subsequent declines
After you finish your recycling schedule
Hi Trevor,
Trevor
Make it easy for the customer to update their payment method
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21. Test…Test….Test… Try new recycling frequencies against your Control
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Test…Test….Test…
Try new recycling frequencies against your Control
Test processing on a new day or time of day
Try reprocessing on Fridays, or the 1st/15th of the month
Can you test a recycling solution with your Processor or other 3rd Party?
Trevor
Try different communication practices with customer ( s, texts, phone calls)
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22. and Then…Test Some More
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and Then…Test Some More
Discover if your Processor can remove the expiration date from transactions when credit card is declined
Test “guessing” the expiration year. Try this on any soft decline where the expiration date is in the past
Extend expiration date(s) out 3 years 
Work with your IT team to understand if transactions are flagged “recurring” or “ecommerce”
Rhiannon
Analyze acquisition channels, clients, mobile authorizations, and test recycling methods where underperforming
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23. What about YOUR Experiences?
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What about YOUR Experiences?
Rhiannon
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24. RHIANNON HERRMANN – SVP, OPERATIONS RHERRMANN@CLARUSCOMMERCE
RHIANNON HERRMANN – SVP, OPERATIONS TREVOR NIES – SR. DIRECTOR, PAYMENTS, RISK OPS & BI If you have any questions about the presentation, go to our LinkedIn Group (the Payments Education Forum) and request an invitation (this is a closed group specifically for the payments industry).