Backup Payment Method

There are over 2,000 reasons a credit card transaction can fail and recurring transactions have a 10% chance of being declined. Recurly has both proactive and reactive strategies to reduce the risk of payment failure; adding a backup payment method is one more strategy to combat involuntary churn.

Backup Payment Method Overview

With Wallet, subscribers can add multiple payment methods to an account. Backup Payment Method is an extension of Wallet with two main capabilities.

• A payment method can be set as a backup.
• For any invoices that have a decline and a backup payment method can be used; Recurly will automatically attempt to collect with the backup payment method

Having a backup payment method can prevent any interruption to the customer's subscription and helps keep your relationship with your subscribers.

Prerequisites

• Available to all merchants who have Wallet enabled. There are additional fees to use Wallet. Please reach out to your Account Manager or Account Executive to learn more.

Setting a backup payment method

• One backup payment method can be set for each account
• A backup payment method can be set in the Admin Console, API V3, and API V2.
• In the APIs, a backup can be set using the /billing_infos, /subscriptions, and /purchases endpoints.
• Before setting a payment method as a backup, ensure you have your subscriber's consent. Verify with your legal team on what consent your company requires to use a payment method as a backup. The most common options we see are updating your terms and conditions and/or explicitly asking customers for consent when adding the billing information.

When will the backup payment method be used?

• The main use case for a backup payment method is to resolve payment issues for failed subscription renewals. If a backup payment method is set, it will be used on any invoice that goes into dunning.
• The invoices that go into dunning include: subscription renewals, invoices created using the API, invoices from adding charges or invoicing now in the Admin Console, and force collect attempts on an invoice.
• The two specific scenarios where a backup payment method won't be used are purchase requests and subscription changes. Both of these cases return an immediate error to have the subscriber correct their payment information. At that point, subscribers or merchants can use a different payment method from the account if desired.

How does a backup payment method work for various payment methods?

There are many different types of payment methods Recurly supports across the globe. When processing transactions, Recurly needs a response from the gateway if a payment was successful or declined. Given Recurly needs a decline response to use the backup payment method, we sometimes have to wait a few days before trying the backup.

• If the payment method can provide an immediate response, Recurly will retry the backup payment method immediately. Immediate responses are available for the majority of credit cards, debit cards, and wallets.
• For payment methods that have a delayed response, Recurly will wait for the initial payment to be declined before starting the backup attempt.

Retries for a backup payment method

In the rare case the initial and backup transactions are both declined, Recurly will attempt to retry these transactions during dunning.

• Recurly will retry the initial and backup payment methods, waiting for a decline response before starting the next attempt.
• The num_collection_attempts field on an invoice will increment for each transaction attempt. This value controls the amount of times an invoice can be retried.
• When a backup payment method is available to be used, the transaction attempts will get split between the initial and backup payment method.
• If there is a hard decline for a transaction, we will not continue to retry that payment method for the invoice.

Changes for merchants to implement backup payment method

• Update your integration to support Wallet
• Before setting a payment method as a backup, ensure you have your subscriber's consent. Verify with your legal team on what consent your company requires to use a payment method as a backup. The most common options we see are updating your terms and conditions and/or explicitly asking customers for consent when adding the billing information.
• The invoice will show the payment method that was able to get a successful transaction. All transactions attempted for the invoice are visible under the invoice in the Admin Console or in API responses.
• Payment declined webhooks will not be sent until both the initial and backup payment have both been declined.

Changes for subscribers when using a backup payment method

• Customers need to provide consent to have a payment method used as a backup. This consent can be explicit or in terms and conditions. Ensure you have your subscriber's consent policy covered prior to setting payment methods as a backup.
• Subscribers will need a user experience where they can manage their payment methods and determine which payment method should be their backup payment method.
• The payment declined email will only be sent once Recurly has a failure for the initial and backup transaction.
• We expect the majority of subscribers to utilize a combination of different payment methods with Wallet. We expect combinations of Debit Cards, Credit Cards, Wallets, ACH and other payment methods. If the subscriber is paying with ACH on CheckCommerce, we recommend using another payment method besides ACH as the Backup. Subscribers will receive emails that a payment is processing for each transaction on the invoice when using CheckCommerce ACH. In the scenario a subscriber has CheckCommerce ACH as the Initial and backup payment method for an invoice and the initial payment fails, the subscriber would receive three emails their payment is processing.

Analytics

• The Recovered Revenue and Dunning Effectiveness reports have both been updated to include recoveries from a backup payment method.
• The billing_info v5 export has a column called 'backup_payment_method" which can be used to understand the accounts that have a payment method set as a backup.
• The transactions v5 export has a column called 'backup_payment_method_used' that can be used to understand which transactions were a result of a backup payment method attempt.

Testing Backup Payment Method

• In order to test backup payment method against your gateway, ensure your site is in Development mode so you can mock responses with your gateway. Once you have a successful subscription signup, use a payment method that will have a declined response for the initial payment and a successful response for the backup payment method.
• Backup payment method can be tested using your sandbox site using these test card numbers

Considerations

• If there are any communication errors with a gateway, a backup will not be attempted. In order to prevent the chance of duplicate transactions for your subscribers, Recurly will wait for confirmation the transaction failed before attempting a subsequent transaction.
• Given any payment method can be assigned to a subscription or one time purchase, there are use cases where a subscriber may want their Primary payment method on the account to also be their backup payment method. If the payment method used for the initial transaction is also the backup payment method, Recurly will just use the payment method for retries and will not do a backup attempt.
• If you are using Custom Gateway Routing and the initial payment fails, a backup payment method will still be routed to the requested gateway if it is supported on the gateway. If the backup payment method is not supported for the gateway, the transaction will follow your default gateway routing.
• We do not recommend using two ACH payment methods for the initial and backup scenario. There are less reasons for ACH transactions to fail and it will result in multiple emails to subscribers.