According to a new report released by Recurly, a recurring-billing technology provider based in San Francisco, card declines on subscriptions averaged more than 12% in 2015. The company analyzed 25 million transactions over the course of 2015 to provide its analysis.
Card Decline Increase
As Recurly reports, the EMV rollout was the main reason for the increase. The analysis also revealed that declines grew throughout 2015, averaging almost 16% in the fourth quarter. The company finds seasonality could also play its role in such increase.
The authors of the report note that Q4 of any year featured increased retail activity since consumers started making their holiday purchases and the balances on their credit cards increased.
There is also another factor that played its role in the latter part of 2015. It has to do with the fact that cardholders received new credit cards with additional security measures to fight point-of-sale (POS) fraud. These cards came with new expiration dates. What is more, in many cases, they were designed with new security codes. On a side note, if this information is not updated, transactions can be declined.
Churn and Found Subscriptions
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The report presented by Recurly focused on churn and found subscription merchants as well. It was found out that these merchants were likely to lose around 10% of their business to attrition within a typical year.
According to the report, churn rates grew at the beginning of the year. B2C businesses had higher churn rates than the average, which was 11.2%. B2B churn rates were a bit lower than the average. 20% of the total churn was not found to be on purpose, meaning invalid card information on file could be the reason for these subscriptions to be canceled.