While the handling of any payment data requires that strong data security measures be built into the payment system at every level, online recurring payment processing must address a unique set of data security concerns compared to one-time payments. The biggest of these is storing customers' sensitive data elements including a credit card number, CVV, and expiration date. Recurring billing generally necessitates the storage of payment data in the merchant’s systems so that the payment method can be repeatedly charged without the customer entering their credit card details before each transaction.

Tokenization is especially valuable for these types of payments, as it allows merchants to tokenize payment data and use the tokens for subsequent transactions instead of storing the raw, sensitive data on their servers. Enforcing strong security measures on customer accounts, such as requiring multi-factor authentication, can also reduce risk as it aims to prevent unauthorized access to payment details stored in customers’ accounts. North’s Recurring Billing API offers secure and flexible subscription management with options to set the recurring payment period that works for your business.

Any subscription billing software that stores sensitive data must also implement proper data purging practices. When customers cancel their subscriptions, merchants must securely delete the payment data or archive it following PCI-approved data retention policies.

Multiple factors can contribute to subscription payment failure, leading to loss of revenue and, potentially, subscribers. One of the most common recurring billing issues occurs when the customer’s card on file expires without being updated. Payment services are available to assist with this, such as Visa Token Service, which enables financial institutions to update expired payment credentials without any manual intervention from the customer. In addition to automated services, merchants can send notifications to customers before recurring payments are due and inform them of any potential issues, such as a payment method that is expired or set to expire.

Additionally, diversifying available payment methods increases the likelihood that one will be successful. This can be done by encouraging customers to save multiple credit cards, PayPal, or mobile wallets on file. If one payment method fails, the subscription billing software can simply move on to try the next method, so that one payment failure no longer means that the sale can’t be completed.

Customer churn refers to the percentage of customers who purchase a business’s products or services but subsequently discontinue purchasing. With subscription payments, preventing active churn can mean keeping subscribers engaged, but another risk is passive churn which occurs when a customer’s payment-on-file fails and recurring transactions cannot be completed. Preventing passive churn can be difficult, but pre-dunning messaging has been shown to be effective, which refers to notifying customers before membership payments are due.

Traditionally, dunning involves contacting the customer every time a payment fails, but some payment failures may be resolved within a few days of the error simply by retrying the payment method. Setting up automatic retries before sending a notification to the customer can prevent unnecessary emails and provide a better user experience. North’s Recurring Billing API comes with this feature out of the box. The 'retries' property can be used to set the number of consecutive days to attempt a payment after a failure, and if the payment still fails on the last day, the business can choose the preferred action to perform, such as transferring the current balance to the next billing cycle.

One of the most common reasons that subscription payments are disputed is that the terms of the subscription are not clearly communicated. This can include billing cost and frequency, promotion details, and cancellation policies. Merchants should make the terms and conditions of their services clear and concise so customers don’t have to analyze too many pages of fine print to understand what they’re agreeing to.

Customers who forget about recurring payments may also initiate chargebacks. This can be prevented by sending notifications in advance of each billing cycle. By offering customers the ability to temporarily pause their subscriptions, then notifying them about upcoming payments doesn’t necessarily mean they’re inviting customers to cancel their subscriptions. But for those who do wish to cancel, making it easy to opt out can prevent them from “canceling by chargeback.”

Scaling up a business can mean increased revenue and more options in terms of how the business is run, but businesses must have the capacity to handle greater usage of services, whether that be internal inventory and billing systems, or the payment applications that facilitate online recurring payment processing. Servers, databases, and payment gateway processing systems must efficiently manage increased volumes while maintaining fast response times.

The subscription system should also be designed to be flexible enough to integrate with other applications over time, as needed. For example, when a subscription system is first launched, it may not need to integrate with Customer Relationship Management software at that time, but they should be able to easily connect in the future as more customer data is generated and stored.