Automatic update of credit card information for recurring billing merchants
Posted on Wednesday, January 16, 2008
One of the biggest problems for merchants that charge credit cards on a recurring basis is maintaining accurate credit card information on file. In any given year, roughly 50-70% of Visa cardholders will change their account information. This places a heavy burden on merchants to reach out to customers and capture the updated information.
There are a number of reasons credit card details change including bank mergers that result in new numbers, identify theft, balance transfers and the regular updating of the card's expiration date. Regardless of the cause, merchants face an uphill and expensive battle to deal with these changes. Eight years ago Visa started working on a program they call Account Updater (VAU). They created an automated system that directly interfaces with merchant accounts and updates customers credit card information. Here is how it works:
1. Merchants are enrolled in VAU through their participating Visa Merchant Bank. 2. Visa card Issuers submit electronic files with updates to Visa when a cardholder's account information changes.
2. Visa card Issuers submit electronic files with updates to Visa when a cardholder's account information changes.
3. Issuers are required to send these file updates within two business days, and are strongly encouraged to send them daily to ensure that account-on-file Merchants have the advantage of the latest authorization data.
4. The Merchants credit card information is sent to Visa. VAU processes inquiries against its database and provides responses to the Visa Merchant Bank.
Participating Merchants are required to update their customer account database within five business days after receiving VAU updates from their Visa Merchant Bank and to ensure that the updated database is used in future Visa transactions in accordance with Visa Account Updater Terms of Use.
Visa charges a nominal fee for the service which varies according to volume but is in the range of $.30 to $.50 per 'matched' file.
Related:
Braintree Account Updater Service
Comments
Robert Crocker said on Thursday, May 08, 2008:
This is definitely a good idea. And, since recurring charges are going to be the backbone of my SAAS business model it's nice to see the VISA is addressing this issue.
Personally though I'm going to try to do everything possible to get the customer to use a bank account for recurring charges but it's better to have money coming in from VISA and/or Master Card than to not have anything coming in at all.
jason w said on Friday, March 12, 2010:
Wow, this is shocking... I reported my Visa card lost/stolen because a merchant was charging it without my permission and simply wouldn't stop the recurring billing. The only way I could stop it was to cancel the debit card. Visa then sends out the new debit number back to the scammer merchant, and I'm now getting screwed again!! The only way I know to stop the charges is to close the whole bank account... thanks Visa, have a nice life!!