By Frederick Felman, Recurly
The long-heralded breakup of Costco and American Express, announced on February 12, 2015, has stirred more than a little controversy and confusion over the impending swap of Costco’s current American Express card for its successor. Costco finally named the replacement, a Citigroup Visa-branded card, which gave rise to questions for consumers that ranged from “When will I get my new card?” to “Will my credit score be impacted?”
However, there are other important and looming issues that will impact subscription businesses that have accepted the Costco-branded American Express card as a form of payment. These issues include:
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- How to ensure subscription service continuity for the American Express cardholders who carry the Costco card — and revenue continuity for subscription providers? The switch has the potential to confuse customers and harm a subscription provider’s reputation due to factors outside their control.
- What will be the user experience for customers who have subscriptions tied to their American Express card? These subscription services can be everything from newsletters to streaming entertainment services and even monthly gift box sets.
Luckily, some account updater services provide an easy answer to these questions. Even though this case involves a change in the credit card brand, account updater services from TSYS and Recurly will automatically provide new Costco Visa card information in exchange for the outdated American Express card. As a result, recurring subscription transactions should proceed without a hitch, just as they would if there was updated card information for any Visa card.
With one in 10 American Express cards in circulation being affected by this change, this is important. Without Account Updater services that are smart enough to handle the change, very large sums of recurring revenue would be at risk due to churn caused by credit card declines.
Costco will start to send out the new Visa cards in late May, so if your business is based on a subscription business model now is the time to check with the company that provides your billing infrastructure and see if they are prepared for the switch. Doing so can ensure your customers don’t experience disruption to services and your business is not faced with sudden, preventable churn.
Frederick Felman is the Chief Marketing Officer for Recurly, a company that provides an enterprise-class subscription management platform for thousands of subscription-based businesses. For the past 25 years, Felman has made his career marketing consumer and enterprise technologies, and has had success building high-tech businesses, brands and categories. Most recently he was Chief Marketing Officer at MarkMonitor and the Brand Protection Business Unit at Thomson Reuters. Felman received his Bachelor of Science in Business Administration from the University of Southern California. He lives in San Francisco where he sometimes skillfully avoids collisions with Teslas on his bicycle route to work.
