Keep Card-On-File and Recurring Payment Information Current

Reading Time: 3 minutes

Last Updated on November 24, 2020 by

Merchants who keep their customers’ account-on-file recurring payment information do it as a form of convenience for both their customers and themselves. Subscription merchants and automated billing merchants rely on account-on-file or card-not-present (CNP) payment information.

When that information is out-of-date, due to new card numbers, changing expiration dates, or cards reported lost or stolen, merchants can lose revenue when that information changes without notification. They can also lose customers who get irritated at the interrupted service as if it’s somehow the merchant’s fault the card information has changed.

A few credit cards and a small combination lock. Merchants who have card-on-file and recurring payment information need to keep it current and secure.By participating in Visa or Mastercard’s account updater solution, merchants can increase their authorization approvals, reduce their service cancellation, reduce the cost of contacting cardholders to get updated information, and cut customer service costs associated with reinstating subscriptions.

Both Visa and Mastercard offer merchants a way to keep that card-on-file information up to date. Mastercard has the Automatic Billing Updater (ABU) system, while Visa offers the Visa Account Updater and Real Time Visa Account Updater.

Visa’s Account Updater and Real Time Visa Account Updater

The Visa Account Updater (VAU) and the Real Time VAU are both options for merchants and are not mutually exclusive. In fact, Visa recommends that merchants participate in both programs to receive maximum benefit for their customers and themselves.

VAU offers:

  • Operates outside VisaNet
  • Requires two-step authorization process
  • Supports batch files for large scale updates
  • Facilitates portfolio conversions from other payment networks

While Real Time VAU offers:

  • Operates within VisaNet
  • Enables one-step for both authorization and account updates
  • Provides faster speed-to-update for faster account file changes
  • Does not support brand conversions

The way the system works is that enrolled merchants make automated inquiries about their account-on-file customers. VAU processes those inquiries against its database and syncs the information with the acquiring bank. Visa only responds with specific data elements within an inquiry file from a qualified merchant.

The responses can include account number or expiration date updates, as well as closed account information. The acquiring bank forwards the data responses within two business days to the requesting merchants who must then update those accounts before requesting an authorization. So it’s a good idea to make those updates a few days before your billing dates.

All VAU data is transmitted through a secure, direct connection between the endpoint and Visa via Open File Delivery (a component of Visa’s Direct Exchange) or the Visa File Exchange Service.

Real Time VAU works in a similar manner. According to the Visa bulletin on the subject, it looks like this:

  • Merchants send authorization request through their acquirers including the VAU indicator
  • VisaNet determines Real Time VAU eligibility based on defined criteria
  • If eligible, VisaNet sends inquiry to VAU. If not, transaction proceeds to authorization request
  • Authorization request is sent to issuer. If account information has changed, authorization request is updated first
  • Authorization response is sent to acquirer and merchant with updated information if provided by VAU. Merchants need to update their billing files
  • Transactions do not need to be approved to receive updated PAN and/or expiration date values or account status updates in the transaction response message

Mastercard’s Automatic Billing Updater

Mastercard’s Automatic Billing Updater (ABU) works much the same way as the Visa Automatic Updater.

They can help prevent transaction decline disruptions by extending the life of card-on-file accounts. In fact, Mastercard says their ABU solution can eliminate 33 percent of CNP declines.

According to their 2017 bulletin on the subject, it works like this:

  • Participating issuers submit their account changes to the ABU database.
  • Registered card-on-file / recurring payment merchants submit their stored account data through their acquirer prior to authorization.
  • Acquirers submit the account data inquiries to the ABU database.
  • Mastercard processes merchant account inquiries against issuer-reported account changes and returns results to acquirers.
  • Acquirers return updated account records to their merchants.
  • Merchants update their files with the changed account information and use it for future CNP transactions.

Mastercard has some additional options available, including the Acquirer Request Bulk File, which lets you update many accounts at once. They recommend this as the primary method for updating stored information, especially before authorization.

They also have the ABU API, which they recommend using to see if an ABU account update is available before you retry a declined transaction.

If you’d like to learn more about how to use Visa’s Automatic Updater and Mastercard’s Automatic Billing Updater to help you keep more of your customers (and keep more of them happy), Corepay can help. To learn more, please visit our website or call us at (866) 987-1969.

Photo credit: TheDigitalWay (Pixabay, Creative Commons 0)

We appreciate you following Corepay’s blog. Let’s collaborate, send us your article suggestions, questions, and/or feedback to: [email protected].