| Merrill Lynch predicts the market for SaaS and Cloud | | | | Inertia is powerfully engrained in human behavior. When |
| Computing is $160B, including $95B in business and | | | | a subscription billing or recurring payment appears on a |
| productivity applications. Payment processing and billing | | | | consumers’ credit card statement, it can stay there |
| are necessary components to monetize SaaS and | | | | month after month, sometimes for years, even if a |
| Cloud Computing applications. But, only the right | | | | consumer is no longer using the service. This is |
| payment processing technology will be effective. The | | | | particularly true for low ticket items. Some people |
| very nature of SaaS and Cloud offerings means | | | | don’t want to take the time to call and cancel |
| recurring payments and subscription billing models are | | | | because their time is more valuable the cost of the |
| inherent. Consumers of SaaS and Cloud Computing | | | | service. Others don’t review their credit card |
| applications don’t buy software. Rather, applications | | | | statements. Still others are just lazy. |
| are consumed as needed and are paid for based on | | | | Merchants are wise to take advantage of this inertia. |
| usage or billed on a monthly, weekly, daily, or even | | | | But, if a merchant has to contact consumers to update |
| hourly basis. | | | | billing information, it is inevitable that many of the people |
| SaaS billing and Cloud Computing recurring payments | | | | will simply cancel the subscription. How can a |
| have require specialized payment processing solutions. | | | | merchant avoid contacting consumers to update |
| One of the main issues with a recurring payment or | | | | payment processing information? The answer is by |
| subscription billing model is card declines. A decline | | | | working smarter, not harder. Merchants interested in |
| happens when the card on file is used for the recurring | | | | increasing cash flow and protecting recurring billing |
| payment transaction and the payment processing | | | | income implement the correct payment processing |
| authorization comes back declined rather than | | | | technology and put automation to work. |
| authorized. Naturally, declined transactions means there | | | | The right technology allows merchants to rescue |
| is no money generated for the merchant. There are | | | | 50-70% of declined transactions quickly and easily. |
| many reasons for a decline. Cards can be upgraded | | | | Declined transactions are transformed into authorized |
| and the bank sends the consumer a new card. | | | | payments using the magic of specialized payment |
| Security breaches or ID theft can cause issuing banks | | | | processing. Automatic account updating is a payment |
| to send out millions of new cards. Cards that are lost | | | | processing feature which drastically reduces card |
| need replacements. Expiration dates on cards expire. | | | | ‘declines’ due to cards that have been |
| Credit limits can be exceeded. | | | | re-issued, upgraded, or expired expiration dates. When |
| It’s not unusual for a merchant to have up to 10% | | | | a credit card transaction is declined, updated card |
| of cards declined during each recurring billing cycle. | | | | information is automatically retrieved from the issuing |
| Every declined transaction means lost revenue to a | | | | banks. In less than 1 day, records are automatically |
| merchant. Losing even a small portion of recurring billing | | | | updated, and the transaction is completed. |
| revenue each month is a big hit to most merchants. | | | | Automatic account updating for recurring billing can be |
| When a card declines, merchants must have a | | | | combined with a recurring billing transaction recycling. If |
| method to obtain updated card information. Many | | | | a credit card is declined because it is over limit, the |
| companies email or call consumers and ask for | | | | transaction will continued to be worked, based on the |
| updated information. This is expensive and time | | | | internal rules, for up to 15 days to receive an approval. |
| consuming. After all, subscription billing and recurring | | | | This procedure happens without merchant or |
| payments are often relatively low ticket; therefore, it | | | | consumer intervention. If you need SaaS billing, |
| can be more expensive to devote the resources to | | | | payment processing for cloud computing, or are a |
| updating the card information than the transaction itself | | | | merchant with a subscription billing model, get this |
| is worth. | | | | technology today. You’ll discover it is one of the |
| Moreover, every contact that is made with the | | | | smartest decisions you ever made to safeguard your |
| consumer for updated information gives the consumer | | | | recurring billing revenue streams and ensuring continuity |
| an unnecessary opportunity to cancel the service. | | | | of cash flow. |