The subscription business model is exploding. New software companies now offer software-as-a-service applications (SAAS) instead of perpetual licenses. Services such as Spotify, Dropbox , Skype and thousands of others offer subscription services. Traditional companies continue to depend on subscriptions, such as newspapers and magazines. Even utilities, debt collection companies, health care providers and direct selling merchants offer subscriptions for consumable products (ever receive a monthly shipment of nutritional supplements you never really wanted?).
What do they all have in common? Credit cards.
More specifically, these merchants use what are known as automated recurring billing (ARB) platforms for merchants who use card not present (CNB) billing for their clients.
Parallel to this is a crisis in credit card payment declines. Card not present merchants using ARB platforms suffer from payment decline rates of 10-20% of their subscription base due to a variety of factors, such as cards hitting their limits, cards that have expired, or cards that have closed.
This can take a huge bite out of profits when a merchant as to continually resubmit payments.
Card not present profitability solutions
CentreBack payments, a payment profitability solutions service for card not present recurring billing merchants, was founded by entrepreneur Michael Bradley, to solve this problem.
Traditionally merchants have used their own internal “re-try” logic when an attempted authorization fails. However, CentreBack realized merchants needed a more repeatable, quantifiable and strategic approach to managing payment recovery – a key component in managing the entire lifecycle of a customer.
CentreBack created a recovery platform that:
• Increases the ability of firms to automatically recover failed payments
• Seamlessly integrates into automated customer contact solutions, and
• Identifies sales channels and/or campaigns which lead to higher decline rates
So how did CentreBack get to where they are today?
Force.com considered, then rejected
CentreBack needed to create an automated payment recovery platform to address this market problem, and turned to Softjourn, a software engineering firm, specialized in building sophisticated and secure payment processing solutions for demanding U.S. and European clients.
We helped them build a state-of-the-art product called Revenue Patrol which was designed to increase merchant’s authorization success rates by 25%. Initially we looked at Force.com, Salesforce.com’s cloud computing platform, on which to build CentreBack’s solution. However, we rejected it due to its lack of portability across platforms at the time.
Java based solution for portability and flexibility
Eventually we suggested to CentreBack that a Java-based solution, which is more portable across platforms, would give CentreBack more flexibility with the application.
As part of this project, Softjourn provided an end-to-end service that included design, development, testing and deployment of the Revenue Patrol application.
One of the key requirements of the platform was to develop the application in accordance with PCI Data Security Standards for payment applications. This includes security features such as:
• Encryption configuration for credit card fields
• Gateway configurations
• Removing private data from completed or hard failed transactions.
We worked with CentreBack’s PCI compliance auditor to assure that all PCI requirements were met.
The delivery also included an easy to use business-user interface, an integrated analytics package, and a sophisticated rules engine to support complex business processes associated with exception management for payment. We ensured that Revenue Patrol was able to call out to third party contact systems, such as text messaging, emails, or IVR solutions.
The project development process and governance included mandatory weekly meetings for project status reviews, answering questions and solving any issues that may have arisen.
“I felt like there was a much more professional approach, distance did not become an issue, really the team understood the goals of the project. A lot more collaboration rather than a one way push of here is what you need to do,” said Mike Bradley, CentreBack’s Founder and CEO.
The solution was built using Linux, PostgreSQL, Apache Tomcat, Sun Java SDK, as well as the Spring Framework, Spring WebMVC, Spring Security, Hibernate ORM, Jasypt + Bouncy Castle security frameworks. Libraries included jFreeChart +ceWolf, Java Mail, Jasper Reports, Quartz scheduler and Apache commons.
Revenue Patrol was deployed in a PCI compliant private cloud using Rackspace as the host.
Revenue Patrol has successfully been launched and is now in Beta testing. The next step is to roll this out to a larger group of sizable card not present automated recurring billing merchants.