Visa Account Updater: Keeping Track of Cardholder Data so You Don’t Have to
Want more sales with no added fraud liability? Of course you do…who doesn’t?!
Reducing customer friction is a consistent, proven method for achieving higher sales. After all, the fewer barriers between customers and products, the more likely they will end up together. That’s why Visa Account Updater (VAU) could be every subscription merchant’s best friend.
In this article, we’ll look at how Visa Account Updater works and how it can help simplify subscriptions to capture more revenue.
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What is Visa Account Updater?
- Visa Account Updater
Visa Account Updater, or VAU, is a service that exchanges updated account information between participating merchants and Visa card issuers. Merchants using stored information for recurring payments can use VAU to boost retention and prevent chargebacks.
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Visa developed VAU to be a secure and automated data clearinghouse. The system helps get updated cardholder information to merchants in a timely, cost-effective manner.
Visa Account Updater ensures that merchants always have access to customers’ current bank information for purposes of recurring billing. Using it can save time and prevent hassle while promoting customer satisfaction, retention, and loyalty.
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Why is Visa Account Updater Necessary?
Visa Account Updater is mandated by Visa. But, why?
Subscriptions are an increasingly popular business model. They encourage ongoing purchases with little-to-no effort on either end of the transaction. For merchants, this means a reliable stream of revenue that’s easy to predict from month to month.
For subscriptions to work, the merchant needs to have their customers' payment card data to facilitate future orders. The card data stored to conduct recurring payments need to be correct. This can present a problem, as consumer card information changes regularly for many different reasons:
- The card may have been replaced due to loss or theft
- The original card has expired
- The cardholder’s bank account was closed or upgraded
- The customer’s name or address changed
Let’s face it: storing and managing large tracts of information can be an extremely time-consuming and cost-prohibitive process for many merchants.
Cardholder information mismatches can anger otherwise-satisfied customers, leading to more declined transactions and service cancellations. Holding outdated card details can also lead to more improper data re-entry, lost or stolen card numbers, and other trouble that can impact the merchant’s reputation and revenue.
VAU goes beyond addressing each of these issues. It helps improve on them in real time.
How Does Visa Account Updater Work?
Visa Account Updater ensures that merchants employing a subscription billing model always have access to the most accurate billing information possible. The process works by pre-verifying merchant data against Visa’s on-file information.
Here’s a basic rundown on the VAU process:
01 | Issuers Send Updates to Visa
Under the VAU mandate, issuing banks are required to send an electronic update to Visa any time a cardholder’s account information is altered. Visa processes the updated cardholder information and distributes it via the ACH network.
02 | Acquirers Receive Updated Information
A few days prior to billing, the merchant's acquiring bank receives current account information for all card-on-file or ongoing payment customers.
03 | Acquirers Check Information Against VAU
The acquirer submits the data to VAU, which compares the information against its database and responds with any mismatches.
04 | Acquirers Receive Lists of Necessary Changes
VAU forwards the latest data to the requesting merchant, who is then required to update their customer billing files within five days.
With Visa Account Updater, merchants get added security, increased revenue, and streamlined services. For their part, cardholders experience less hassle and may have increased confidence during transactions. In the next sections, we’ll look at these points in finer detail.
Benefits of Visa Account Updater for Merchants
Visa Account Updater makes commerce a lot more efficient. For example, merchants save money in customer service costs while garnering boosted sales. They can approve more transactions and maintain higher levels of customer satisfaction. VAU might even play a role in chargeback prevention under certain circumstances.
Specific merchant benefits tied to Visa Account Updater include:
Simplifying and securing
approvals from issuers
Helping boost sales and
Helping prevent the
termination of services
Another added benefit is the built-in organization and collation of data. Merchants might otherwise have to pay extra for this service. With VAU, though, current cardholder information is easily accessible without the need to create additional management systems.
Benefits of Visa Account Updater for Cardholders
One serious issue many cardholders have with subscription models is a sudden loss of service.
When merchants make changes to their systems, account details and other customer-facing information can sometimes be lost. That puts both cardholders and merchants in an awkward position, leading to a lack of confidence on the cardholder’s part. Many of these headaches are solved by Visa Account Updater.
Offers cardholders a simplified
account update process
Avoids interruption of services,
improving customer retention
Avoids negative experiences
like declined authorizations
Doesn't require cardholder to
tell merchants about changes
Here’s a great secondary benefit of VAU for cardholders: avoiding late fees.
It’s not uncommon for cardholders to get hit with late fees or penalties resulting from card information mismatches. With VAU in place, cardholders don’t have to worry about fees getting tacked onto their bill because the information on file was inaccurate, resulting in a delayed payment.
Real-Time Visa Account Updater
Visa also offers Real-Time Visa Account Updater. This is a separate tool that can be used alongside the standard VAU.
Real-Time Visa Account Updater removes the pre-authorization step (required by the current VAU). It effectively eliminates the time gap between merchants requesting account updates and submitting authorization requests.
Both systems feature unique capabilities, and Visa recommends they be used in tandem. These work as follows:
|VAU Features||Real-Time VAU Features|
|Operates outside VisaNet||Operates outside VisaNet|
|Requires two-step authorization process||Enables one-step for both authorization/account updates|
|Supports batch files for large scale updates||Provides faster speed-to-update account file changes|
|Facilitates portfolio conversions from other payment networks||Provides faster speed-to-update account file changes|
Visa Account Updater & Chargebacks
Visa Account Updater use can have a direct impact on chargeback volume.
Visa Account Updater can also reduce the risk of seeing chargebacks filed with Visa reason code 12.4 (Incorrect Account Number). If the account information on file is updated automatically, that makes it less likely that the merchant will end up forcing through a transaction which leads to a chargeback.
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Most significantly, VAU plays a major role in ensuring overall customer satisfaction. As we’ve mentioned before, unsatisfied customers are much more likely to file chargebacks. Without VAU, subscription services could be interrupted. This could be a nasty surprise for the cardholder, even if it was their responsibility to inform the merchant of any account changes.
The seller could then have to confront the cardholder, and the subsequent frustration and inconvenience may be enough to push them to action. The buyer might cancel their account and file one, or even multiple chargebacks.
Avoiding the situation entirely by using Visa Account Updater is a much better strategy.
Another Piece of the Puzzle
Visa Account Updater is a helpful tool. That’s why, like the Visa Resolve Online system, its use is mandated for card issuers.
Customers, however, can still opt out. While a buyer may do this out of a misplaced concern for their own privacy, such action could lead to future complications for consumers and merchants alike.
One good option is for merchants to notify cardholders upfront about the availability of Visa Account Updater. This is one instance in which merchants really can make a difference by educating consumers.
At the end of the day, though, merchants should think about VAU as one more tool in an expansive arsenal for chargeback and fraud prevention. They must leverage each component to create a truly effective risk mitigation and chargeback prevention strategy.