Card Vault

Card On File Definition and Benefits

Learn how a card on file strategy benefits your payment stack.

Written by
Andrew Sjogren
Publication Date
July 12, 2023
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Card on file (CoF) has become a game changer for the influx of businesses operating on a recurring revenue model over the last decade, and especially post 2020. This method of storing customer's card details securely for future transactions not only streamlines the payment process but also enhances customer experience.

What is Card on File?

Card on file is a payment method where businesses securely store their customers' card details for future transactions. This is a common practice in subscription-based businesses, online retail, and any other business models where repeat transactions are frequent. Securely stored card information can be used for recurring billing, one-click purchases, and other customer convenience-oriented features. 

The main benefits of CoF are its ability to simplify the checkout process, reduce payment friction, and consequently increase customer retention and recurring revenue. However, businesses need to adhere to PCI-DSS security standards to ensure the safe storage and handling of customers' card information.

How Card on File Works

Keeping cards on file is all about creating an optimized payment experience. When customers engage with your platform for the first time, they can choose to securely store their card details. This information is then tokenized and tucked away in a PCI-compliant vault. The next time they shop or when their recurring payment date comes, their stored payment credentials are ready to go — no need to enter all the card details again. It's a smooth process that not only cuts down on checkout time but also boosts customer loyalty and solidifies revenue streams. 

Imagine a customer using an online grocery retailer – we’ll call him John. After John makes his first purchase, he chooses to securely store his credit card details. When he returns the next week for his regular grocery shopping, he is able to breeze through the checkout process without needing to enter his card details again, making his online shopping experience frictionless and efficient.

The Benefits

Adopting CoF comes with a myriad of advantages. It allows businesses to provide a seamless transaction experience, increases customer retention, and significantly reduces the chances of payment failures on several levels.

Seamless Customer Transactions

With card on file, customers can enjoy a seamless transaction experience. It removes the necessity of entering card details for each transaction, drastically reducing checkout time. By enabling one-click purchases and automatic renewals, it adds an extra layer of convenience. This streamlined process improves the overall customer experience, fostering satisfaction and boosting retention rates.

Reducing Churn

Churn is a critical issue for subscription-based businesses. The average SaaS churn rate is between five and seven percent. With card on file, businesses can substantially reduce involuntary churn caused by payment failures, leading to an increase in customer retention and overall business growth.

Let’s use a subscription-based streaming service with 100,000 subscribers as an example. Each of their subscribers is paying $10 a month, but they have a monthly churn rate of 5% This results in 5,000 subscribers or $50,000 lost each month. If the implementation of CoF reduces this churn by just 1%, the company retains an extra 1,000 subscribers each month. Over the course of a year, this amounts to an additional $120,000 in revenue.

Increased Trust

Card on file functionality goes the extra mile to ensure customers' payment details are safely tucked away in a PCI-compliant vault. By taking the worry out of online transactions, customers can focus more on what they're buying and less on how they're paying. A secure, tokenized  environment that doesn't just retain customers - it actively attracts new ones.

Start embracing CoF for your business today to enhance customer retention and reduce churn.

How To Maximizing Revenue

Implementing a card on file strategy is a pivotal part of making the most out of every transaction. It's about unlocking potential revenue hiding in plain sight and enhancing customer lifetime value. Spreedly’s Advanced Vault has enabled powerful ways CoF can drive recurring revenue growth and turn your payment operations into a revenue-generating powerhouse.

Card Lifecycle Management

A vital aspect of the card on file strategy is managing the lifecycle of stored card details. This process involves keeping the payment methods up-to-date. Spreedly's lifecycle management service is a valuable tool for merchants and other clients who want to ensure their merchant-initiated transactions are successful. Our current offering will update stored payment methods automatically. 

Configurable Settings

With Advanced Vault, customers can adjust the rules and configurations in tailoring their vault, maximizing its efficiency. Here are some examples of settings we work with you to optimize.

  • Automatically unenroll payment methods in account updater services that incur third party costs after two contact card holder updates
  • Remove stale credentials that would normally incur a cost per event

Network Tokenization

If you are storing cards-on-file, then provisioning stored cards with network tokens can bring a host of benefits. A network token is a special payment token created in partnership with the card-networks and issuing banks that can increase acceptance rates and lower processing costs. They can be stored alongside the basic payment token created for a payment method and you can selectively use them to transact across preferred gateways. 

Transform Your Business with CoF and Spreedly's Advanced Vault

Implementing a card on file strategy, coupled with the advanced features of Spreedly's Advanced Vault, can significantly enhance every eCommerce and subscription-based business. By optimizing payment methods, reducing transaction decline rates, and actively managing stored payment details, you can provide a seamless customer experience and maximize your recurring revenue. Spreedly’s Advanced Vault brings an active component to payment method storage.  It combines a modern toolkit for maintaining the payment method vault with a managed approach from Spreedly experts to maximize the efficiency of our customers' vaults.

Advanced Vault offers flexible rules and configurations tailored to your organization's unique needs. From card lifecycle management of card details to network tokenization services, Spreedly supports a robust card-on-file solution, turning a traditional payments vault into an adaptable, intelligent service.

Ready to transform your business with CoF and Spreedly's Advanced Vault? Contact us today to get started!

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