Optimizing Recurring Billing with BIN-files

As the importance of recurring billing increases, new needs emerge at merchant services market. More and more recurring billing companies turn to BIN-files in order to get vital information for optimizing their recurring billing process. In this article, we are going to explain, how usage of BIN-files can enhance recurring billing process. Some information on card intelligence can be found in our respective article.

One of the key problems faced by companies in recurring billing context is that customers can use pre-paid and gift cards while subscribing for some memberships or services. The “trick” is often used by those who want to get a free trial period, and know that (due to the low membership cost) they are not going to deal with collections agencies when the company finds out that the membership is no longer paid for (see article on collections).

Example

A person subscribes for a pay-as-you-go membership costing $15 a month, using a pre-paid card. When the card is depleted, the member can just through it away and have the membership get cancelled, therefore relieving himself from the responsibility for canceling the service properly.

Often such cases create problems for merchants. One of the ways to avoid these problems is to use BIN-files to identify these cards and block them at the time when the accounts are initially setup.

Another advantage of BIN-files is that they can be used to identify transactions, whose processing cost is too high (too low). In subscription-based services industry the issue is even more important than in retail space. The reason is that while in retail business the card, causing money losses on transaction processing, is used just once, in recurring billing it is used regularly, and the potential losses from high processing fees are, consequently, larger. For example, if you don’t want to pay high processing costs, associated with rewards cards, you can identify them through BIN and decline them, thus, avoiding expensive processing fees.

Consequently, BIN-files, can help you in several ways:

  • You can identify expensive rewards cards and avoid processing them
  • If BIN-file indicates, that many of the cards used by a merchant, could be processed at lower rate through some specific debit network, it might be reasonable for the merchant to sign a separate agreement with the network and process the cards through this particular network (and not through Visa and MasterCard), saving on processing.
  • In our previous articles we also mentioned, that, using BIN-files, you can identify the bank that issued a given card. Therefore, you can use BIN files while conducting decline analysis to detect problems, that might be associated with a specific issuing bank. Working through this issue with one of your customers will automatically provide a solution for everybody else, carrying cards, issued by this bank.

Conclusion

Card intelligence through BIN-files can help you to save on processing costs, as well as detect abusive practices during recurring billing and common credit card transaction decline reasons. If you are not using BIN-files today, it may be the right time to start.