Ask HN: How much billing info to ask in Subscription form? Best practices? | Hacker News Reader

Ask HN: How much billing info to ask in Subscription form? Best practices?

2 pointscharliepark3 comments

I'm in the process of getting a SaaS app ready for launch, and one of the last components is the billing module. We're going to be using Braintree for our processing, and our expected subscription rate will be $10 / month.

To reduce the likelihood of fraud, credit card billing companies say you should get lots of billing data, like the user's address, their CVV code, the name on the card, and so on. But the more fields that are present, the more friction there is for the user to enter in their data. Also, the more opportunities for fat-fingering the entry and creating validation errors of some sort.

I notice that 37signals only asks for three pieces of information: credit card number, expiration date, and billing ZIP code. This is going to put their charges into the "unqualified" rate level, I believe, as it's not getting the billing address, CVV, or other elements that reduce the likelihood of fraud. At the same time, my understanding is that most business credit cards are considered "unqualified" anyway, so it might be moot. I know that, as a user, I'm much more of a fan of the 37signals approach, where I don't have to fill in loads of data.

Have any of you experimented with different amounts of data-collection and seen how that's affected either your chargeback rate, your conversion rate, or your bottom line? This seems like the kind of thing that would be a "known problem", but I can't find any writeups that cover it.

Would love any anecdata you have.

failquicker and fredjiles both make some valid points. There are arguments for including as much billing information as possible, and arguments for collecting the bare minimum. The optimal approach varies from merchant to merchant, and industry to industry.

We generally recommend collecting at least a five digit postal code - this is the variable you have direct control over that helps a larger percentage of your transactions process at the lower qualified rate. Other information, such as the street address, can be helpful for other reasons, but does not effect your processing rate. Collecting the CVV is usually a good idea, as well, though again - this data does not effect your processing fees.

It's been our experience that for SaaS providers such as yourself, traditional fraud is lower than you would see for merchants shipping physical goods. You'll still want to protect against chargebacks, however, and there are a couple options outside of collecting a large amount of data from your customers.

You'll want to first be sure the descriptor that appears on your customer's statements is obviously tied to the product they've purchased. You'll also want to ensure that the number appearing on their statements is a number that they can call and quickly get information about what the charge relates to.

Once your chargeback rate gets much above 1% of total credit card volume, banks will begin to analyze your processing and conduct various risk reviews. However, unless you're experiencing an obscene chargeback rate out of the gate, the bank will usually work with you to lower this percentage before shutting you down completely. Should you start to see chargebacks approach that 1% figure, you can then look at additional options, like increasing the amount of information you're collecting.

Much of this is just good practice for any business - accurately describe your service, be responsive to customer issues, and provide a great product.

This is really a question for your underwriter. As it varies greatly depending on who holds your merchant account. You are right, most credit cards are going to default to the unqualified rate anyway.

But the bigger problem is this.

If you get bare minimum information from your customers, and then for some reason you start getting more than a few charge-backs, they might close your merchant account. Which is a fun exercise in thinking on your feet =)

The best bet is to get a merchant account with an account representative that is familiar with your business model and talk to him about how you plan to proceed. You are much less likely to run into problems if they verbally signed off on your actions.

As to fees. This is really cart before the horse. You have no sales yet. Trust me, when you have a whole gang of sales, people will start tripping over themselves to process your transactions at a happier rate.

I think you are right with just collecting minimal information. Systems we have built in the past where people want to collect all the billing information tend to cause more issues with transactions being declined because someone adds apt 7 or some thing else into the address field that doesn't match up. Unless you are selling a product where fraud would be a concern I could see collecting more information. I would think that fraud using SasS is pretty low compared to buying consumer electronics and such.

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