How do I configure the frequency of the payment method updater?

Overview

The payment method updater is a powerful Zuora feature that can be used to request updates to your customers' payment methods. This is a feature for select gateways that allows you to proactively stay up to date with common changes to credit card payment methods like new expiration dates, closure of the account or replacement of the account number with a new one.  By having the most up to date credit card account information, you can minimize the number of failed payments when a payment run is made.

Zuora's payment method updaters can be flexibly configured to choose when the update run should kick off relative to the Bill Cycle Day. We often get questions about when payment method updaters should be configured to run and this solution will provide guidance on the most optimal timing.

Solution

We think about the payment method updater as a process that you run daily in the background to proactively keep your payment methods up to date as opposed to a process that runs only when you get a credit card failure - the latter is a more reactive approach.

The pricing for the updater (payable to the updater service provider) is optimized to run as frequently as needed, since only credit card matches have fees. As an example: If you send over 100,000 credit cards to check for updates and have 5 matches that are updated, you are only charged fees for the 5 matches.

Conversely, if credit cards were updated only upon failed payments, it is purely reactive and the time it takes to wait for the updater to work delays your cash collections, typically by a whole bill cycle.  And that's if the updater gets updated cardholder information. 

Then, what happens if the updater did not receive updated information after waiting for the process to complete?  You still need to manage the retry or de-provisioning process, but now you've lost 5-7 days waiting for the updater.  This is reactive and in our opinion creates far more operational overhead than the proactive approach of just running the updater every month to get the latest card information.  The operational overhead is higher because:

• You have 5-10 days where you are waiting for the update and at the end of the 5-10 days and there is no guarantee the account will be updated. 
• You have missed opportunities to collect payments with retries and now you have an account that you have provided service for an extra 5-10 days and your Days Sales Outstanding has increased. 

Additionally, we believe the subscription economy is all about managing the relationship with your customer.   We see your customers buying new services and products at anytime.  If you are waiting a week to collect updated information, what do you do if your customer wants to buy a new product or upgrade their service while the payment method updater is running?  Timing is always a challenge with a process that runs over several days, but all in all, we believe it is best to be proactive when thinking about the payment method updater.

With the Zuora payment method updater, you can define when you want to submit the payment methods for update.  Some payment method updaters take 4 days and others take 7 days. Zuora predefines the recommended number of days you should use on the payment method updater (with a default value) which accounts for this latency, but you have the freedom to select another date if you have a specific need to complete the update process at a different time than the default Zuora provides.

Each account in Zuora has a Bill Cycle Day which could be any day of the month (for example, 1st of the month or 5th of the month)  The Zuora payment method updater will submit the payment methods based on what you defined on the payment method updater configuration.  For instance, if you configure the payment method updater to submit 9 days prior to the Bill Cycle Day and the update process takes 7 days, a customer with Bill Cycle Day of 8th of the month will complete 2 days ahead of the Bill Cycle Date, on the 6th of the month.

The payment method updater runs daily and automatically and selects the default payment method for any account to be updated.  If you run billing daily or at other intervals, the payment method updater will run in the background and proactively keep your payment methods updated.
 

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