It is no secret that everyone is busier than ever. As a result, anything you can do as a business owner to streamline the purchasing experience, without compromising the security of the information people provide, can set you apart favorably from your numerous competitors. 

Offering people the ability to make subscription payments using the information you have securely stored can increase client satisfaction and retention, while simultaneously bolstering your profits.

What is the card on file model?

As the name suggests, the card on file (CoF) model is a method in which you collect and store customer payment information securely. These details are then available if the person wishes to make additional one-time or recurring purchases in the future. 

Alternatively, CoF particularly lends itself to the subscription-based structure that has become so popular in recent years across the commercial space.

How does CoF work?

Today’s strict security regulations explicitly prevent you from jotting down shoppers’ credit card details or otherwise keeping them in unprotected places. When CoF payments are used correctly, the customer chooses to have their data stored in order to streamline future payments. 

The information is then tokenized, a process that replaces what the customer has provided with a random series of letters and numbers that is useless to hackers and other types of cyber thieves. 

When the time comes for another purchase or the next installment of a subscription, the payment specifics are already supplied, leading to a frictionless experience for the shopper.

Benefits of CoF subscription payments

As any guide to recurring payments will be quick to state, there are many benefits to be gained from offering recurring/subscription payments to your customers. For one thing, the arrangement is predictable, leading to increased trust. 

All terms, including the credit card or bank account from which payments are withdrawn, the amount of the withdrawals, the frequency (weekly or monthly, for example) and the duration of the arrangement are agreed upon in advance by you and your customer. 

Complete, transparent documentation allows payments to proceed smoothly and changes to be made by you or your customer as needed according to the terms of the contract. 

In the end, both of you are rewarded with predictability, increased control over your budget and a stronger customer-client relationship.

In order for the subscription program to work, it is necessary that you store customer payment details securely. This allows for a smooth payment experience every time without the need for the client to constantly re-enter their details. 

Consequently, they can enjoy the products and services they receive from you without added stress or complication. By the same token, you will find that you need to chase much fewer delinquent payments, leading to more harmonious relationships with your long-term customers.

The benefits of automatic payments using CoF mean that you will experience a much lower incidence of failed payments. When transactions do not go through properly, the likelihood of losing the customer altogether is vastly increased. 

This phenomenon is known as churn, and it contributes to the demise of many a subscription-based company if allowed to get out of hand. By streamlining the funds transfer process, CoF reduces the likelihood that vital payments will be disrupted during processing, leading to lower churn and a concurrently higher client retention rate.

Whether you do business in a physical store, online or both, gaining customer trust is vital. Integrating CoF payments into your operations provides you with the ability to foster this trust by being able to assure customers that their payment details are safely stored and tokenized in a secure vault. 

Furnishing this assurance enables your valued clients to have the fast and convenient purchasing and subscription experiences that they are increasingly demanding without fear that their identity or credit card information will be compromised.

Elements of a CoF agreement

If you decide to integrate CoF into your retail model, you will need to be in compliance with the Payment Card Industry Data Security Standard (PCI DSS), a set of measures designed to protect cardholder data. 

To that end, your processes or those of the third-party provider you use will need to be regularly audited to ensure PCI compliance.

The first step is to obtain the customer’s consent to store their details in your system’s secure vault. 

In the agreement, you will need to obtain details such as information about the transaction, specifics about your business (location and contact details), an abbreviated version of the stored credential (such as the last four digits of the card), details about the expiration date and how the stored information will be used and specific instructions on how the agreement can be canceled by the cardholder.

Next, you will need to verify the account. This occurs by running a zero-amount transaction through your system. In most cases, the card information will be stored by a third-party payment provider with demonstrated PCI compliance. 

If you choose to undertake the storage process yourself, you will be required to undergo regular, stringent PCI compliance audits.

Today’s commercial climate is rife with contradictions. On one hand, customers are increasingly demanding enhanced personalization and a streamlined shopping experience at all touchpoints of their buying journey. 

Simultaneously, it is more important than ever to protect the integrity of the sensitive payment data that shoppers provide.

Adopting card on file payments allows you to have the best of both worlds. When you employ them in the infrastructure of your recurring billing or subscription strategies, the buying experience is both smooth and safe, with all of the details of the agreement made clear from the outset. 

At the same time, the robust tokenization and anti-fraud measures put in place during the data storage process help to ensure that the best possible measures are being taken to shield sensitive records from would-be identity thieves and fraudsters.

If you want to enhance your business by accepting CoF payments, your payment service provider may be one of your best primary resources to assist you in configuring your systems and training staff. Speak to them today, and your new CoF programs could be up and running in no time, providing both you and your valued shoppers with an additional, secure payment choice.