The problem of failed transactions has yet to be fully addressed in industries such as healthcare, insurance and utilities, Vindicia Chief Strategy Officer Trace Galloway writes in the new PYMNTS eBook, “2023 Payments New Year’s Resolutions.”
Payments professionals in eCommerce and digital media companies with recurring customer relationships have long been dealing with the problem of failed credit and debit card transactions. From expired cards to insufficient funds, hundreds of reasons can cause a recurring payment to fail.
But no company that operates on recurring payments is immune. In several other industries, failed transactions are a problem that hasn’t yet been fully addressed. Take healthcare, insurance and utility providers for example.
Regardless of the industry, a failed transaction disrupts the connection between the company and the consumer, giving the customer an opportunity to leave. If the customer is disconnected from the product or service due to a payment error, it may require substantial effort and resources to reactivate them. Failed transactions are more than a momentary headache. They can result in lost customers and lost future revenue.
For 2023, it’s time for payments professionals in these industries to take a page from the subscription industry and make a significant new year’s resolution: It’s time to tackle the scourge of failed payments and ensure satisfied customers, a healthy brand image and ongoing revenue streams.
When a patient undergoes treatment or elective surgery, they typically only pay a partial amount upfront. The balance is due on a recurring payment plan. While this is convenient for the patient, it puts hospitals and healthcare providers at risk.
After treatment, the customer has a low incentive to track whether card payments are going through. If a transaction fails, it’s up to the healthcare company to chase the customer via a collections department or agency — a long and expensive process. It’s far preferable for medical providers to employ solutions that prevent failed transactions in the first place.
In the complex and competitive world of insurance, policyholders make recurring premium payments to maintain coverage and have little contact with the insurance provider unless they make a claim.
Failed transactions are a dangerous trap for insurance companies because they disturb the smooth and frictionless connection with the customer, giving them the opportunity to negotiate a better plan with a competitor. This is a situation that insurers should avoid. With the right technology, they can.
Like subscription companies, utility providers depend on a seamless, ongoing connection to customers and recurring payments. If a payment fails, customers could risk losing service and leave providers with a disruption in revenue and costly (and unpleasant) disconnects. This demands significant resources that could be saved if utility companies make a move to subscription technology in 2023 and start preventing credit card declines before they happen.
All industries that work on a recurring payment model are affected by failed transactions. You don’t need to be Netflix or Peloton to start treating your customers like subscribers. Payments professionals in healthcare, insurance, and utilities need to look toward the subscription industry and take advantage of new technologies, solutions, intelligence, and best practices that today help subscription professionals minimize the problem of failed payment transactions.
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