For years, the change in card credentials that occurs when issuers send out replacement plastic has caused heartburn for cardholders and merchants alike. New card numbers, expiration dates, or three-digit card-verification values can help thwart fraud when cards are lost or stolen, but they also wreak havoc with unaware merchants, especially recurring billers and online services operating against cards on file. With the mass reissuance of cards to meet EMV chip card obligations, the problem has only grown worse.
Now, a 4-year-old Seattle-based technology startup called Switch Inc. says it has an answer. Last week, Switch launched an application programming interface called CardSavr that automatically notifies merchants when issuers re-issue cards with new credentials. Issuers integrate the API, but merchants need do no programming work, according to Switch.
The update occurs when the consumer activates a new card, according to Katherine Chavez, director of marketing for Switch. At that point, the API asks the cardholder if she wants to update the card with the sites she normally visits. “It puts the power in your hands to select which sites you want this on,” Chavez tells Digital Transactions News. Meanwhile, “the merchant, without having to do any heavy lifting, keeps updated cards on file,” she adds.
CardSavr supports 12,000 e-commerce sites, according to the company, though Chavez will not disclose how many issuers have integrated the API. The company also will not reveal its pricing for issuers.
While keeping cards up-to-date has always been a pain point for recurring billers and subscription services, the risk of failed authorizations has been magnified by the onset of EMV. Issuers have tried to keep card numbers the same when sending out replacement chip cards, but often the replacement is an occasion for an upgrade to a premium plastic.
“So if you had an old Classic card when you opened an account years ago, but the issuer has decided to upgrade you to a Signature program during an EMV upgrade, then your number will change, which is a hassle for your Netflix or Blue Apron subscriptions,” says Michael Moeser, director of payments at Javelin Strategy & Research, a Pleasanton, Calif.-based research firm.
The EMV conversion has been going on more or less in full gear since October 2015, when the major card networks activated a rule making merchants liable for counterfeit card fraud if they are not prepared to accept chip cards. About two-thirds of all U.S. Visa credit and debit cards are now EMV cards, according to data released last week by the network.
Failure to update consumer card credentials can have a serious impact on businesses that rely on recurring card-based transactions. Internet TV giant Netflix Inc. revealed in an earnings call two years ago that its results had been hurt by failed authorizations caused by cards on file that had been replaced by EMV cards with different credentials.
“This update [from Switch] is a major win for all, ranging from retailers and card issuers to consumers, since it allows a more seamless process in updating re-issued cards … that are used for recurring billing,” says Moeser in an email message. “It alleviates the burdens of forgotten cards on file at the gym, Netflix, etc. and gives more control over how those cards are used.”
According to Chavez, CardSavr, while available now to issuers, will also be a component of an overarching product now in beta testing that will allow users to update cards, manage passwords, autofill forms, and select which card to use at each site.