Saas Billing, Cloud Computing Monetization And Recurring Billing Payment Processing

Merrill Lynch predicts the market for SaaS and Cloud Computing is $160B

, including $95B in business and productivity applications. Payment processing and billing are necessary components to monetize SaaS and Cloud Computing applications. But, only the right payment processing technology will be effective. The very nature of SaaS and Cloud offerings means recurring payments and subscription billing models are inherent. Consumers of SaaS and Cloud Computing applications dont buy software. Rather, applications are consumed as needed and are paid for based on usage or billed on a monthly, weekly, daily, or even hourly basis.

SaaS billing and Cloud Computing recurring payments have require specialized payment processing solutions. One of the main issues with a recurring payment or subscription billing model is card declines. A decline happens when the card on file is used for the recurring payment transaction and the payment processing authorization comes back declined rather than authorized. Naturally, declined transactions means there is no money generated for the merchant. There are many reasons for a decline. Cards can be upgraded and the bank sends the consumer a new card. Security breaches or ID theft can cause issuing banks to send out millions of new cards. Cards that are lost need replacements. Expiration dates on cards expire. Credit limits can be exceeded.

Its not unusual for a merchant to have up to 10% of cards declined during each recurring billing cycle. Every declined transaction means lost revenue to a merchant. Losing even a small portion of recurring billing revenue each month is a big hit to most merchants. When a card declines, merchants must have a method to obtain updated card information. Many companies email or call consumers and ask for updated information. This is expensive and time consuming. After all, subscription billing and recurring payments are often relatively low ticket; therefore, it can be more expensive to devote the resources to updating the card information than the transaction itself is worth.

Moreover, every contact that is made with the consumer for updated information gives the consumer an unnecessary opportunity to cancel the service. Inertia is powerfully engrained in human behavior. When a subscription billing or recurring payment appears on a consumers credit card statement, it can stay there month after month, sometimes for years, even if a consumer is no longer using the service. This is particularly true for low ticket items. Some people dont want to take the time to call and cancel because their time is more valuable the cost of the service. Others dont review their credit card statements. Still others are just lazy.

Merchants are wise to take advantage of this inertia. But, if a merchant has to contact consumers to update billing information, it is inevitable that many of the people will simply cancel the subscription. How can a merchant avoid contacting consumers to update payment processing information? The answer is by working smarter, not harder. Merchants interested in increasing cash flow and protecting recurring billing income implement the correct payment processing technology and put automation to work.

The right technology allows merchants to rescue 50-70% of declined transactions quickly and easily. Declined transactions are transformed into authorized payments using the magic of specialized payment processing. Automatic account updating is a payment processing feature which drastically reduces card declines due to cards that have been re-issued, upgraded, or expired expiration dates. When a credit card transaction is declined, updated card information is automatically retrieved from the issuing banks. In less than 1 day, records are automatically updated, and the transaction is completed.

Automatic account updating for recurring billing can be combined with a recurring billing transaction recycling. If a credit card is declined because it is over limit, the transaction will continued to be worked, based on the internal rules, for up to 15 days to receive an approval. This procedure happens without merchant or consumer intervention. If you need SaaS billing, payment processing for cloud computing, or are a merchant with a subscription billing model, get this technology today. Youll discover it is one of the smartest decisions you ever made to safeguard your recurring billing revenue streams and ensuring continuity of cash flow.

by: Tina Brandon

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