Replacement is a function that automatically updates information for expired credit cards.

If an EC site does not support replacement, customers will usually need to enter their new card details to make a purchase. However, if an EC site supports replacement, the site will update the card information automatically, so customers will not have to reregister card information at each shopping site.

This article will explain basic information about the replacement function related to credit cards.

What’s in this article?

• What is the replacement function?
  
• The benefits of replacement
  
• Preventing unpaid or uncollected amounts from being invoiced
  

What is the replacement function?

Businesses use the term “replacement” in many situations, including bookkeeping, accounting, and real estate. The meaning of “replacement” differs depending on how an entity uses it, but most businesses would typically consider replacement as a method of updating information, similar to the “replacement method” or “replacement system” used in accounting.

As indicated, credit card replacement is a processing function that lets businesses deal with expired credit cards. Typically, for credit cards whose systems are connected between the payment processing company used by the business and the credit card issuer, the replacement function automatically updates the card information to the latest version after confirming the validity of the card with the issuer.

In other words, by using the replacement function an agency provides, a business can automatically update credit card information to the latest version without having to ask the customer to reregister their new card; that makes it possible to continue charging without any problems with sales, such as payments canceled without notice.

Replacement is usually performed for customers who will be charged or who are receiving a service and not for customers who have canceled their EC site or subscription service.

The benefits of replacement

Using the replacement function will lead to an improved payment experience for customers and increased convenience for businesses.

Advantages for business owners

For operators of EC sites, if payment errors occur because of expired customer credit card information, there is a risk those operators will not be able to collect the payment and their profits will decrease.

However, if the replacement processing function lets customers make payments without delay based on updated card information, it is possible to avoid missed or lost payments, continue to provide services, and avoid a negative impact on revenue.

This also avoids having to communicate with customers about updating their card information and managing that information.

The role of replacement in subscription services

Replacement plays a major role, especially when customers must make ongoing payments, such as subscription services for online shops and other regular deliveries.

For example, when a customer uses auto-payment—such as for a subscription service in which they sign up to get products delivered monthly or for streaming content—if the customer’s credit card expires or if they had to update their card information because of theft or loss, a payment error can occur. In these cases, if a business has the replacement function, it will update the card information, including the card number, so there will be no payment interruption and services can continue.

Customer benefits

As with the benefits for the business, if customers are able to pay without any problems, they can continue to use the subscription service uninterrupted.

Another major benefit of replacement is it saves the customer from having to reregister their credit card details.

Preventing unpaid or uncollected amounts from being invoiced

Without the replacement function, businesses such as EC site operators have had to continue charging customers whose credit cards have expired. However, by using the replacement function of the payment agency service, the business can reduce the workload involved in credit card payments for customers whose credit cards have expired.

In addition, businesses can incorporate various sales collection functions and countermeasures as well as automatic notification functions for expired cards and retry functions for payments.

The replacement function, which maintains the continuity of payments, improves the convenience of payment (on the customer side) and collection (on the business side) in credit card payments and the operation of EC sites. As a result, replacement will continue to evolve, with a focus on improving security and simplifying operations and will be available in more business situations.

Stripe Payments handles a wide range of payment-related functions and services, including payment acceptance, information processing, and revenue management, and it meets all payment needs on one platform. In addition to the replacement function, Stripe also uses a tokenization system for payment information using network tokens, so regardless of whether the customer has updated their payment information, payment can go through successfully.