A card account updater (CAU) is a service offered by credit card companies and payment gateways to help businesses maintain up-to-date credit and debit card information. When a customer's payment information changes because a card has expired or been replaced, the CAU automatically updates the card details in the business's system. CAUs help reduce payment disruptions because of outdated card information and are helpful for businesses that operate with recurring payments or subscriptions.

Below, we'll cover what businesses need to know about using this service: how CAUs work, their potential challenges and how they fit into overall payment systems.

What's in this article?

• How do card account updaters work?
  
• Benefits of using card account updaters
  
• Challenges of using card account updaters
  
• How to choose and implement a card account updater
  

How do card account updaters work?

CAUs are used when a business learns it has outdated customer card information, which can occur because of expired cards, card reissues, account closures or card upgrades. The key feature of a CAU service is it requires minimal to no involvement of the customer and the business to acquire new card details, relying instead on the credit card network, payment processor and issuing bank. Given the transmission of sensitive financial information involved in this service, the process is governed by strict security and compliance protocols such as the Payment Card Industry Data Security Standard (PCI DSS). These protocols are necessary to protect cardholder data.

CAUs are offered by every major credit card company, and although they all function in similar ways, there are specific systems and procedures unique to each company's service. For example, Visa's Account Updater CAU and Mastercard's Automatic Billing Updater CAU use different methodologies for updating card information: Mastercard uses a push/pull model, whereas Visa gets direct updates through participating acquirers.

The general process for how CAUs operate is outlined below.

• Business request: When a business identifies the need to update a customer's credit card information, it starts by making a request to its payment processor, noting the customer's existing card details. The payment processor acts as an intermediary, forwarding this request to the appropriate credit card network (e.g. Visa, Mastercard, American Express) upon receipt. The specific details that must be included in these requests will vary depending on the network, and the payment processor is responsible for ensuring forwarded requests are in the appropriate format and include all required information.

• Credit card network request: Upon receiving the request from the payment processor, the credit card network reaches out to the financial institution that issued the customer's credit card, also known as the issuing bank. The bank verifies the request, checks its records and pulls up the most up-to-date card details, including account number and expiry date. The bank then securely sends this information back to the credit card network.

• Secure data transmission: After obtaining the new card information from the issuing bank, the credit card network relays this data to the payment processor through secure channels that protect the customer's sensitive financial data.

• Business record update: Upon receiving the updated card information, the payment processor updates the business's records accordingly, enabling the business to process future transactions with the customer's current and accurate card details. Some payment processors have automated update mechanisms that trigger instant business record updates. Businesses are notified once new card details have been added and may also receive reports summarising which customer cards were updated and the reasons for these updates.

• Database updates: The credit card network and payment processor also maintain databases of customer credit card information. These databases are updated with the new card details once they are received from the issuing bank.

Benefits of using card account updaters

Card account updaters are important for businesses, particularly those depending on recurring payments such as subscription-based services or instalment plans. The central feature of CAUs is preventing transaction failures because of outdated card information, providing a steady revenue stream for businesses and uninterrupted service for the business's customers. Credit cards go through constant lifecycle events – expiries, reissuances because of loss or theft, account closures and upgrades – and a system for keeping up with these events, such as a CAU, is necessary for businesses that need prolonged access to accurate card information.

Businesses using CAUs may see the following operational benefits:

• Fewer declined transactions: Most credit cards expire every three to five years, leading to lost revenue for businesses when customers forget to update their card details. By maintaining current card details, CAUs increase the transaction success rate, help prevent revenue leakage and support consistent revenue and cash flow, boosting overall financial health and letting businesses engage in more accurate forecasting and financial planning. Postmates, for example, saw a 1.72% uplift from a CAU, resulting in US$60 million in revenue in one year.

• Continuous service delivery: For businesses that operate on a subscription model or via instalment plans, continuity of service is key. CAUs help maintain this continuity by ensuring services are not cut off because of outdated credit card information.

• Reduced administrative burden: Manually tracking and updating credit card information is a resource-intensive task. Updaters eliminate this manual work, freeing up valuable resources for revenue-generating activities. Updaters can also reduce administrative costs, saving businesses money on manual data entry, customer support inquiries and chargeback fees.

• Improved customer retention: A smooth billing process is a key factor for customer retention in a subscription or recurring payment model, and frequent payment issues can lead to customer dissatisfaction and, eventually, churn. Half of subscription churn is because of avoidable failed payments such as expired cards, and updaters can decrease churn by maintaining active subscriptions and stabilising recurring revenue streams. CAUs also improve the customer experience by minimising payment-related disruptions and by handling account updates without making contact with the customer, which can sometimes be perceived as intrusive or inconvenient.

• Enhanced data security: Manual card storage and updates expose businesses to a higher risk of data breaches. Updaters securely handle sensitive information, reducing attacks and ensuring compliance with PCI DSS regulations. Updaters also proactively identify suspicious activity, minimising fraud losses and further protect businesses by promptly replacing the account details of outdated cards, which are more vulnerable to fraud.

• Greater scalability: As a business grows, the volume of transactions and customer data to be managed increases. CAUs scale with the business, efficiently handling the growing number of transactions without the need for increases in manual processing.

• Improved marketing opportunities: Updaters' insights into card update trends can give businesses valuable information on customer segments, churn patterns and spending habits, letting them personalise marketing campaigns and increase customer engagement.

Challenges of using card account updaters

As much as CAUs are beneficial, they can come with challenges. Here are some key areas in which challenges may arise with a CAU:

• Integration: Integrating a CAU into existing payment systems can be technically complex, especially for businesses without a robust IT infrastructure. Verifying that the chosen CAU is compatible with various payment processing platforms and accounting systems can require extensive technical expertise and resources.

• Cost: Implementing a CAU service can entail additional costs such as subscription, integration and maintenance costs, and potential transaction fees. For some businesses, especially small to medium enterprises, these costs can be an important consideration.

• Security: Businesses must assess the CAU service's compliance with data security and privacy standards when handling sensitive customer payment information. Managing these security requirements can be challenging, particularly for businesses without specialised security expertise.

• Reliability: Relying on third-party CAU services can create a dependency. If the service provider experiences downtime, technical issues or changes in service terms, it can affect the business's payment processing capabilities.

• Flexibility: Businesses with specific operational needs may struggle to find an appropriate CAU. Some CAUs have limited customisation options regarding features such as the types of transactions that are covered, the card networks that are supported and the frequency of their record updates.

• Technical errors: Like any technological solution, CAUs are not immune to technical glitches or system errors. These can result in incorrect or missed updates, leading to declined transactions and customer dissatisfaction.

How to choose and implement a card account updater

Visa, Mastercard, American Express, and Discover each have their version of card account updater services. American Express and Discover tend to have more direct routes to enrol in their CAU services, while Visa and Mastercard require enrolling through their acquirer, issuer, or payment processor to confirm system compatibility with their services.

There are multiple benefits to enrolling in a CAU service through a payment processor. Payment gateways such as Stripe often include built-in account updater services as part of their payment processing solutions and will handle the technical aspects of integration and maintenance. This can be a distinct advantage for businesses that may not have the technical expertise or resources to manage these processes in house. These payment gateways also typically support updates across multiple credit card networks, offering a comprehensive solution that covers a broad customer base.

The process to enrol in CAU services through Stripe is outlined below as an example of what to expect.

• Contact Stripe: Businesses interested in using CAU services through Stripe should reach out to Stripe directly. Stripe will provide detailed information about its account updater services and how to enrol in them, discussing specific business needs and how Stripe’s CAU service can meet them. For example, businesses should ask about how often Stripe’s account updater service refreshes data and assess whether they might need more frequent updates. Businesses should also ensure Stripe’s CAU service covers the types of transactions most relevant to their offerings (e.g., recurring subscriptions or one-time payments).

• Verify security protocols: Businesses should discuss all security measures in place to protect sensitive customer data during the updater process. Stripe’s services are compliant with PCI DSS, for example, and businesses should verify this and understand how it aligns with their compliance requirements before moving forward.

• Integrate Stripe: Stripe typically offers application programming interface (API)-based integration for its services. Businesses must integrate Stripe’s API in their payment system, which could involve programming work to establish a connection between their system and Stripe’s account updater service. In some cases, Stripe might also support file-based data exchanges, which would involve sending and receiving data files containing credit card information to be processed by Stripe’s system.

• Test functionality: After integration, businesses should conduct thorough testing to confirm the integration is working correctly. This should include testing various scenarios such as card expirations, card reissues, and account changes to confirm the updater service is effectively updating this information.

• Team training: Businesses should provide training to all relevant team members on how Stripe’s CAU works and how to handle any related customer inquiries. Educate the team on the CAU’s impact on business processes and how to use its benefits in day-to-day operations.

• Performance tracking: Businesses should regularly monitor the performance of Stripe’s CAU service in their system, looking for metrics such as a decrease in declined transactions and an increase in successful payment authorisations. If the Stripe CAU service doesn’t meet business expectations and requirements, adjustments and further customisation can be implemented as necessary.

Further information on Stripe’s CAU service, called “automatic card updates,” is outlined below.

• Real-time, automatic updates: Customers who have stored their card details with a business using Stripe will automatically have their information updated when they get a new card without needing to re-enter their details. Stripe has recently unrolled real-time updates, available for Visa in the United Kingdom and Europe and for Mastercard globally, with plans to expand to American Express updates in additional countries. If a charge is declined, we may send a real-time update request and immediately retry the payment with the updated details when available. This feature is particularly useful in situations in which card details are changed at the moment of the transaction.

• Support for various card networks: The service supports most US-issued cards from major networks such as American Express, Visa, Mastercard, and Discover. International support for automatic card updates can vary depending on the country and the card issuer’s participation with the network.

• Billing and subscription management: Stripe’s CAU is integrated with its billing and subscription management services, making it a comprehensive solution for businesses that require regular and recurring payment processes.

• Service costs: Stripe updated its pricing for the card account updater service in October 2023.