Payments Vaulting Seen as Competitive Differentiator for Subscription Commerce

Joe Meuse, vice president of product at Spreedly, told PYMNTS that subscription-based business models face challenges and opportunities in meeting customers’ demands in the digital age.

At a high level, he said, when it comes to subscription payments businesses, “you need to make sure that the payment happens seamlessly on the first try.”

Signing up for a subscription often is a form of impulse buying, he said, where consumers are swayed by media, content, a promotion or other factors — and they want quick access to the services.

Once those customers are in place, there’s another challenge that comes when subscriptions are renewed, or when payment credentials might be declined through traditional methods, Meuse said. Churn can deplete the rosters of subscribers, push customer acquisition higher and can prove to be serious headwinds to growth.

“You don’t want to have any churn, especially involuntary churn,” he said.

That means that beyond the customer-facing interactions, behind the scenes, the merchant wants to make sure they are providing all the information that the payment processor needs to indicate that the payment is a recurring one.

Looking Toward Vaulting

Among the ways to ensure the friction-free experience that subscribers and would-be subscribers demand are vaulted card payments. Vaulting credit and debit cards protects sensitive data and stores the card data in what Meuse said is “an agnostic way so that you can use them through whatever payment channels are most effective for that particular customer.”

Vaulting ensures that card details are kept up to date through digital means, are actively managed and updated whenever cards are replaced, and have robust fraud defenses in place through tokenization.

Meuse said PCI standards are helpful but represent what might be thought of as a bare minimum of protection — robust lifecycle management mandates that replacing lost, stolen or expired cards happens with minimal effort on the part of the cardholder.

Vaulting also occurs in a data-rich environment, he said, adding that transparency is one of the key benefits that are passed along to the consumer.

“[Merchants] want to provide clarity on just what that payment is for, so there are no unnecessary problems or chargebacks later,” he said.

For the merchants, payment vaulting, as offered by firms like Spreedly, also offers payments orchestration. He said orchestration helps foster a “robust payments infrastructure” that helps route and re-route payments through the most efficient paths, even when payments fail and must be retried. The incidences of payments exceptions are made as sporadic as possible.

“We’re focused on a combination of all of these services,” Meuse said. “Though there’s no magic wand that solves all problems, taken in combination, you can get great results.”

Various stakeholders in the payments ecosystem wind up making better decisions about payments optimization through the insights provided by multiple data points and robust payments flows, he said.

Asked by PYMNTS about what will help move the needle to see greater acceptance of payments vaulting, Meuse said that the process will take a couple of years.

A standalone, agnostic vault has advantages over choosing a single provider or ecosystem. The platform model, he said, “leverages the power of best-in-class point solutions wherever they may live” as merchants maintain control of those vaults.

Over time, where vaulting may have once been viewed as an area of operational risk and expense, more enterprises are now finding it critical to always be ready and able to transact.

Vaulting, he said, “can be a key differentiator for a merchant if you do it well.”