At Sharesight [www.sharesight.co.nz] we operate an online, subscription based portfolio management for DIY share market investors. For convenience, most of our customers choose to pay by credit card, and we bill them on a recurring basis, either monthly or annually. When customers subscribe, we make it clear to them that we will bill their card on a recurring basis (and, most importantly, we also make it easy for customers to cancel their subscription whenever they want).
We use the ActiveMerchant plugin (Ruby on Rails) to connect to the DPS Payment Express payment gateway. DPS connects to our BNZ Buyline merchant account which allows us to bill customers in both NZD and AUD. When we pass through a customer’s card details to DPS they return a billing token, and when we need to bill the card in the future, we simply send through the appropriate billing token to DPS along with the amount to be billed (this amount may change if customers upgrade or downgrade their accounts). This saves us from having to store our customers’ credit card details, and worry about the security issues that this entails.
Expired Credit Cards
Until now, the only real issue that we faced was the problem of expiring credit cards. Credit cards generally expire every two years (sometimes more frequently), primarily due to the fact that this is the life expectancy of the magnetic strip on the back of the card. When a customer’s credit card expired, they needed to provide us with the updated card details, otherwise when we tried to charge their card, we would receive a ‘card expired’ error back from DPS. Clearly this somewhat limits the convenience factor for our customers, in fact many customers told us so, pointing out that their card number hadn’t changed.
The solution, as it turns out, is a little known feature called the recurring billing flag. Essentially when a payment is sent through to the bank with the recurring billing flag set, they will (generally) ignore the expiry date when processing the transaction. I came across this feature via this blog post, but could not find it documented anywhere in the technical documentation provided by either the bank or DPS. A quick call to a knowledgeable staff member at DPS, confirmed that they could in fact set this flag for us provided that we obtained written permission from the bank. Luckily we had no problem in obtaining prompt approval from the BNZ, and we were able to have the recurring billing flag enabled on our transactions within a couple of days.
I hope this knowledge is useful for other SaaS vendors who bill customers on a recurring basis. From what I understand, the banks may have different policies on allowing the recurring flag to be set.
Please let us know your experiences.
Special guest post by Scott Ryburn.