How Keeping Credit Cards on File Eliminates Payment Friction and Builds Better Experiences for Your Customers
From medical patients to law clients, as a business grows it becomes more important than ever to promptly collect payment from customers. Growth also comes with a new list of priorities including inventory management, greater customer demands, and even the rise of new competitors.
That means less time for business owners and their team to chase a growing base of customers for overdue payments, while also making sure they’re delivering the best experience possible.
Fortunately, companies have a number of methods available to accommodate their customer’s expanding needs without risking their business–and their revenue. Chief among these is the ability to store credit cards on file.
Here’s what you need to know about storing credit card information and how it helps reduce friction during the payment collection process.
In This Article
- The Rise of Stored Card on File Payments
- Why Do Growing Businesses Need Debit and Credit Cards on File Features
- Adopt Proper Practices for Storing Credit Card Information
- Keep Customer Credit Card Numbers Secure
- Use the Right Credit Cards on File Technology for Storing Information and Payment Processing
The Rise of Stored Card on File Payments
As the world of commerce shifts digitally, many business owners are realizing that keeping customer credit cards on file has fast become a natural part of the payment experience.
Already it continues to play an increasingly significant role in digital commerce. Customer payment preferences have a large impact on how they are most likely to pay – with ACH being most common for major recurring expenses and cards being used for more discretionary purchases.
Yet more card issuers like VISA, Mastercard and American Express continue to look into ways to further support card on file methods so that with the right tools and technologies in place businesses can influence how customers prefer to pay.
Many of these tactics include facilitating updates for stored payments when customer credit cards are replaced or renewed. As a result, companies can quickly maximize the rise of card on file payments.
Even for companies that may not be ready for fully contactless solutions, many can take advantage of the ability to automatically charge stored credit cards and eliminate the need to continuously follow up with customers for their payment details.
Why Do Growing Businesses Need Debit and Credit Cards on File Features
Card on File Payments refers to payments made using a method in which the merchant has stored customer debit or credit cards for current and repeat transactions. This is in contrast to payments collected as “one-off” payments, in which the information needs to be provided each time a transaction needs to be made.
While keeping credit card information on file helps with making sure payments are made in a consistent and timely manner, there are also other valuable benefits to adopting a card on file strategy.
1. Improve cash flow and business efficiencies
Every business relies on a steady cash flow. Being able to generate enough cash from your services and products is heavily impacted by how efficient your business is in collecting those funds. This includes being able to easily track the amount of money coming in and out of the business.
Setting up recurring billing using credit card information and payment credentials the customer has already approved for use helps maintain a consistent flow of income—something that’s critical in today’s competitive business landscape. Research shows that 82% of businesses fail because of poor cash flow management, so keeping revenue flowing regularly is a must.
Additionally, with the ability to use a customer’s credit card on file, businesses have greater flexibility to offer payment plans, can establish subscription pricing models for unique products or services, or even charge retainers depending on the industry. It becomes even more beneficial when these recurring payments are charged automatically.
As a business, being able to simply ask for credit card information once and then maintain a steady stream of income automatically makes it easier for you to visualize how much you’re generating month over month. You can make better revenue projections, improve decision-making for staff management and quickly identify areas of opportunity to address growing customer needs.
2. Minimize work required by staff and employees
Managing payments is a necessary part of running a business. Imagine you run a dental practice and offer a wide range of product offerings, from annual cleanings to cosmetic dental services and Orthodontics braces. If you run a highly successful practice, it can quickly become a major challenge for your receptionist to try to collect payments from every patient immediately after or before their services.
One of the many challenges faced by employees involves the need to constantly ask customers for their card information. Even when the credit card information is the same every time.
With cards on file transactions, businesses and even online retailers can eliminate the need to chase people down to collect payments. Payment platforms like Stax will even eliminate the need for employees to constantly reconfirm credit cards on file for payments that may already be connected to the customer’s account. Even if a card is about to expire, the platform is able to automatically verify with the bank that the credit card details is still valid and reduce the risk of having missed payments.
This allows staff members and employees to focus their energy on what’s really important to the customers—and the business.
Needless to say, investing in payment automation can pay off in dividends. Research by Salesforce found that 74% of IT leaders say that process automation has saved the workforce 11-30% of the time previously spent on manual tasks and 59% indicated that teams have reduced cost by 11-30% thanks to automation.
3. Create better checkout and payment experiences for existing and recurring customers
A major challenge that growing businesses often face is ensuring that the payment process is not only frictionless and easy, but also consistent—no matter how a customer may want to pay. This is especially true for current or returning customers, such as those within professional services and healthcare industries.
This is why being able to bill payments or set up payment plans is fast becoming the norm. With a card on file feature, you can easily expand beyond processing credit cards in person with a terminal or keying it manually when taking payment by phone.
Once details have been set up in the system, a receptionist can immediately bill the card they already have on file and process the transaction, all without the need for additional back and forth.
Constantly being asked for the same payment information time and again can become frustrating. This is commonly seen every time customers need to submit payment through an online checkout form, or whenever a client is asked in person for their debit and credit card numbers.
The right payment tools will allow you to easily send out personalized invoices by email or text with an option for clients to save a preferred form of payment. The details are then automatically saved to their profile without extra effort from a staff member. This is in addition to being able to save payment details provided during an in-person transaction for the entirety of the customer’s lifecycle.
Adopt Proper Practices for Storing Credit Card Information
Simply collecting credit card information isn’t enough to create a streamlined payment cycle. Even if they provide their payment details for a service, it is important to gain consent on the billing cycle associated with the stored card.
This is also reinforced under the Electronic Funds Transfer Act. Three of the most common ways a business owner can obtain consent for storing credit card details include having customers:
- Swipe a signed card and sign a receipt
- Complete an online form; or
- Provide credit card numbers over the phone
Storage of customer credit card details can be handled by having both procedures and technology systems in place that work together to streamline the entire billing process.
There are also other best practices businesses should take into consideration to protect both their business and their customer’s card data.
Set Up Flexible Payment Acceptance Policies for Credit and Debit Cards
Establishing the timing and frequency of billing early on helps with making sure customers are fully aware of what to expect. By creating a streamlined credit card on file policy, it becomes easier for both staff members and customers to feel comfortable in keeping a card on file for payment.
This includes ensuring that you inform customers on how they can expect to be notified of both their expected bill dates and when a credit card has been processed. Notifications can come in many forms from auto alerts for pending charges on recurring payments to automated sends of receipts once the card on file has been charged.
A business owner with clear, flexible payment policies can make saving a credit card on file less intimidating for their customers.
For best results, outline your policies clearly on your website and other customer-facing assets. Consider this example from Birchbox which clearly outlines the company’s payment terms and policies in an easy-to-understand and non-intimidating manner.
Help Customers Find Value and Feel in Control
When customers have the ability to easily set up, adjust, or opt-out on their own, it eases outreach pressures for employees and staff members having to manage tens of thousands of accounts. Especially for established companies that have a continuous rotation of new and recurring customers.
The importance of setting up proper credit card on file practices is seen even with major companies, including Tesla who’s existing credit card billing processes recently allowed a car owner to accidentally auto-purchase a $14,000 self-driving upgrade.
While instances like these can be rare for small and medium-sized businesses, those within certain industries like healthcare and enterprise-level businesses can easily find themselves under similar circumstances if they are not careful. These cases reflect the continued importance of clear billing practices and cards on file policies, in addition to proper payment processing technology that supports these practices.
A good way to implement this best practice is to set up a payments control center that enables customers to add and edit their card credentials as well as specify their payment preferences.
The subscription service Dollar Shave Club, for example, makes it easy for customers to specify the products (and amounts) they want to pay for, along with how often they want to be billed.
Keeping Customer Credit Card Numbers Secure
Security continues to be a major concern among business owners looking to save customer payment methods into their systems. Fortunately, with the rise of more robust payment technology, ensuring the right safeguards are in place when handling credit card information has been made much simpler.
Payment solutions with the ability to save a customer’s credit card on file help businesses should immediately address the following risks that come with manually saving credit card data:
- Manual storage of customer name and credit card numbers: When it comes to storing Personally Identifiable Information (PII), former methods of maintaining print records in folders stored in drawers or filing cabinets are no longer acceptable by today’s standards. This is especially true in regard to debit and credit card information.
- Cloud or Vault storage on computer systems/PCs: Saving credit card information on a computer drive or even a master spreadsheet carries major risks as even the most secure networks can be potentially attacked by clever hackers or malware focused on retrieving sensitive data through a wide variety of methods.
All businesses regardless of how they look to collect and process credit cards are expected to adhere to the Payment Card Industry Data Security Standard (PCI DSS) compliance regulations. These regulations help ensure the protection of a customer’s card data, as well as provide guidance to businesses on ways they can improve and strengthen their ability to securely accept payments.
It is why processing companies and payment solution experts like Stax help by handling payments security, which includes using automated card tokenization practices. This form of encryption ensures PII is never saved within the system so that even in cases of a data breach, information remains safe.
This is due to the fact that instead of saving the actual details, it is replaced with a random string of identification symbols that serve as a unique token representing the data instead.
By using platforms and solutions with already integrated payment security features, you don’t need to worry about the risk that comes with handling sensitive payment details and cardholder data.
Use the Right Credit Cards on File Technology for Storing Information and Payment Processing
If you’re looking for ways to automate payments, optimize digital invoicing and billing practices, as well as add more flexible payment options using cards on file, it is important to find the right payment technology company.
While there are many payment processors and merchant services to choose from, finding a provider that allows you to have greater payment scheduling flexibility and more automated ways for customers to pay can really take your business to the next level.
Stax does both, in addition to allowing you to securely save a customer’s credit card on file through a single platform.
Credit Card on File Benefits with Stax Payments
With Stax, there are no limits on how long credit cards are stored, as well as no limit on the number of credit cards on file you are able to store within the platform. This is a major business advantage, especially as operations begin to scale in regards to the number of customers and transactions being processed on a daily basis.
Through the Stax all-in-one Platform, your business can:
- Collect the credit card details from the customer once and store them in the customer account
- Set up payment plans and update profile details on recurring billing cycles every 3 months
- Auto-update details for a credit card on file when they’ve expired or were stolen
- Handle all of the processing and data security with industry-leading standards for fraud protection and PCI security
Not only is a company able to securely maintain credit and debit cards on file, they can also benefit from the ability to manage, monitor, and streamline every payment type no matter how customers want to pay. The Stax Platform also offers payment solutions that are easy for existing systems to integrate with so that everything works together seamlessly.
Quick FAQs about Credit Card on File Policy
Q: What are Card on File Payments?
Card on File Payments refers to payments made using a method in which the merchant has stored customer debit or credit cards for current and repeat transactions, as opposed to one-off transactions.
Q: How do Card on File Payments benefit businesses?
Card on File Payments can improve cash flow, business efficiencies, minimize work required by staff and employees, and create better checkout and payment experiences for customers.
Q: What are some best practices for storing credit card information?
Obtain consent for storing card details, follow the Electronic Funds Transfer Act, and use reliable technology systems to manage and streamline billing processes.
Q: How can businesses set up flexible payment acceptance policies?
Businesses should establish the timing and frequency of billing, communicate expected bill dates and processed payments to customers, and make it easy for customers to save their preferred payment method.
Q: Why is it important to keep customer credit card numbers secure?
Security is crucial to protect customers’ sensitive information and to adhere to the Payment Card Industry Data Security Standard (PCI DSS) compliance regulations.
Q: What is tokenization in the context of PCI DSS?
Tokenization is a form of encryption where Personally Identifiable Information (PII) is replaced with a random string of identification symbols, ensuring that data remains safe even in cases of a data breach.
Q: What should businesses look for in a Credit Card on File Technology solution?
Businesses should look for a solution that can automate payments, optimize digital invoicing and billing practices, securely save and manage stored credit card information, and offer flexible payment options.
Q: How does Stax Payments help businesses store credit cards on file?
Stax Payments allows businesses to securely save customer credit cards on file, manage payments and recurring billing cycles, auto-update expired or stolen card details, and adhere to industry-leading standards for fraud protection and PCI security.
Q: What are some advantages of using Stax Payments?
Stax Payments offers no limits on credit card storage duration or quantity, allowing businesses to scale their operations without worry, and provides an all-in-one platform to manage and monitor every payment type.
Q: How can businesses get started with Stax Payments?
Businesses can contact a Payments Consultant to learn more about Stax and the benefits of using an integrated payment technology solution.
