It seems like everything is a subscription nowadays. Merchants love subscriptions because customer loyalty is built in to the billing model, providing a consistent and reliable revenue stream. However, despite their popularity there are some downsides. Subscription merchants are invariably labeled high-risk by the banks and processors because they are prone to disputes, fraud and chargebacks. As such, there are a few simple steps you can take in your recurring transactions that are just as important as the product to keep each account rolling.


While retention is built into the subscription model, it’s not a guarantee. Customer satisfaction is a must for lasting revenue. Engagement is far more important for recurring billing than for one-off purchases. Subscription merchants need to communicate regularly with their customers so they understand the value of the products and services they’re getting. Engaged customers are more likely to come to you with service problems before they’re unmanageable.

Another challenge to be on the lookout for is churn. Churn is the rate at which customers unsubscribe. The churn rate is useful to understand the lifetime value of each subscription. The quicker your churn is, the more resources you will be putting into generating conversions to keep up with costs and stay profitable.

It’s important to note that most subscription merchants will be considered high-risk by processors. Recurring billing business models tend to face higher-than-average fraud attacks and so subscription merchants face higher chargebacks as a result. This can limit your options for merchant services. It’s important to work with processors and MSPs that set proper dispute thresholds and have experience with recurring billing.


The quality of your product or service is the key component to longer subscriptions. However, there are some sound fundamentals you should build in to your transaction stream that will also help drive sales and sustain your revenues. It is just as important to engage your customers on billing issues as it is engage them on your product.

1. Be compliant.

Compliance with the payments processors is essential to the success of your subscription enterprise. Failure to comply can put you in hot water with banks and customers alike. Check with your processors and card networks to ensure you’re compliant with their billing requirements, but there are some general rules to follow:

  • Get express cardholder consent
  • Secure your customer payment credentials
  • Send confirmations for start, duration, details, frequency and any changes to subscriptions
  • Send notification of any rollovers from free trials to paid plans
  • Communicate your return policy clearly
  • Don’t bury the unsubscribe option

2. Offer localized payment options

Not everyone uses Visa or Mastercard to make payments online. In China for example, few consumers use international credit cards. In Europe, debit cards are used more commonly than credit cards. Know your markets, and provide the payment methods that serve them. Consider also billing in your customer’s local currency; payment fluctuations can cause misunderstandings and lead to disputes.

3. Get an Account Updater Service

If you’ve had automatic bill pay for your utilities, you know what a pain it is to have to go in and add a new card for payment. Utilities don’t often use update services because you have to pay them, or you lose the utility. Unless you have a monopoly on some essential service like water, you should invest in an updater to keep your billing hassle-free. Expired credit cards induce churn, and that can cost you customers. Account updater services will keep your customer payment credentials current. Whether a card expires or gets canceled, a good updater service will catch it before your next payment is declined.

4. Let the customer choose.

We all want our customers onboard year in and year out. But we can’t just sign them up for the annual package; they have to choose. Customer satisfaction is key to lasting subscription relationships; customers don’t want any surprises with your billing. It’s best that your customer chose a payment plan that works for them. As with keeping compliant for the processors, your customer’s consent is just as important to an enduring relationship.

5. Set limits on refunds.

By their nature, subscriptions transact payments automatically in the background. So it’s easy for the customer to forget they’re paying long after they stop actually using your products or services. You’ll want to minimize your losses in these situations with a clear return policy with well-defined limits.

6. Always get proof.

While customer satisfaction is essential to a profitable subscription, you must also be prepared if the relationship sours into a dispute. With physical goods, you obviously want to keep delivery confirmations handy. For digital goods or SaaS subscriptions, you should be collecting user logs to confirm your customers access your products. Proof of delivery is absolutely essential for retaining revenue.

7. Dispute management is key.

As a high-risk business, subscription billing’s merchants need to be prepared against fraud and transaction disputes. Managing disputes saves money and keeps your merchant account healthy. A comprehensive dispute management strategy has three goals: dispute prevention, chargeback reduction, and revenue recovery. ChargebackHelp fully integrates tools to help merchants achieve all three goals in our dispute management platform ChargebackHelp Plus.


Subscription merchants must take some essentials steps beyond delivering good products and customer service to ensure their success. They must ensure they operate in compliance with the rules of their payment providers. It’s always important to document your customers’ consent, as well as their receipt of what they purchase. Most importantly, as a high risk business, the subscription merchant needs to protect themselves from fraud, chargebacks and disputes.