With all the credit card hacks that have plagued businesses recently, credit card processing is becoming more and more complicated. With EFT packages, we rely heavily on credit cards and whenever a customer cancels their card, we run the risk of not only having to deal with collecting a past due but also having to contact them to update us with their new credit card information.

We typically see a 12% decline rate on credit cards on each draft. This includes all forms of declines: Not enough funds, card reported lost/stolen, bank hold due to fraud etc. To combat these declines, we allow our customers to put a second form of billing on their account; a BACKUP billing method. The backup billing method can be another credit card, debit card, or even a bank account where we can do an eCheck for them.

There are several incentives to the customer. First of all, our system automatically waives the decline charge if the primary method of payment declines but the backup billing method is successful. Second, on each billing cycle our customers receive various rewards such as free upgrades, in-store account cash etc. These rewards only get added to the account when the payment goes through. If the payment does not go through, and even if they pay the past due, the rewards are not added to the account. However if they have a backup billing method on file and that does go through, the member is not penalized and gets all the rewards as well.

Customers love it! It’s a clear benefit to them, and a clear benefit to us because we no longer have to chase them down to collect that payment. On their next visit, the system informs the staff that their primary method of payment is no longer valid (if that’s the case) and they can then update it on the spot before they are sent back to tan.

Couple of months ago, we ran a promo for a month where we offered many customers promotional items we had ordered just to increase our backup billing numbers. It was a huge success and we got several hundred customers to provide us with backup billing.

The result: 4% fewer declines on draft which equates to a 4% increase in EFT draft revenue. The more customers we have on backup billing, the higher this number becomes. Theoretically, if we were to get every single customer to sign up for backup billing, we could drop our decline rate from 12% to 1.2% assuming that the decline rate on the backup billing would also be about 12%.

Given that EFT is a huge part of our revenue stream, this decrease in decline rate has been a phenomenal success for us. Not to mention, we have happier customers, less past dues to collect, and less confrontations to handle which allows the staff to focus on their goal: Sales!

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