By Robert Day, Managing Partner at weAudit. This article was originally written for the Forbes Business Council and published on Forbes.com on December 5, 2024. Its exclusivity period has expired, so the full article appears below, followed by an expanded section on what the service costs.
Card account updaters (CAUs) are handy tools that credit card companies and payment processors offer to help businesses keep their payment info current.
When a customer’s card changes, due to expiration or replacement, the CAU automatically updates the card information in the business’s system. This cuts down on payment disruptions and is a big plus for businesses with recurring payments or subscriptions.
Here’s what businesses need to know about CAUs, including how they work, their benefits, potential challenges and how to implement them effectively.
CAUs kick in when a business realizes it has outdated card information for a customer, such as when a card expires or is replaced. With a CAU, there’s no need for either the business or the customer to manually update card info. It’s handled by the credit card network, payment processor and issuing bank. Security is a top priority, so CAUs follow strict protocols like the Payment Card Industry Data Security Standard (PCI DSS) to protect sensitive data.
Each credit card company has its own version of CAU, with Visa and Mastercard being the most widely used. Visa’s Account Updater and Mastercard’s Automatic Billing Updater each follow unique methods to manage card updates, ensuring they’re seamlessly handled across the board.
For businesses with recurring payments, CAUs can offer significant advantages.
Not all payment gateways support CAUs, and the payment gateway plays a significant role in controlling your credit card processing fees. For more detail, I have written previously on the financial impact a payment gateway has on reducing your credit card fees.
If your business primarily accepts consumer credit cards rather than business, purchasing or corporate cards, the choice of payment gateway may have less impact on your fees.
If you’re uncertain about the details, it’s wise to have an expert review your statement and advise you on the best options. My firm offers complimentary guidance, as do some others in the industry. Just be cautious about signing anything that could lock you into a long-term agreement, and ensure you work with a firm whose industry experience you can verify.
LinkedIn is a helpful tool for checking credentials and background. Many people are playing in this space and claiming on their websites that they are industry experts. However, if you do a quick check, you may find that they have never worked in this industry at all.
There is no single “account updater.” There are four, and they do not all reach you the same way.
This matters for one practical reason. A single “Account Updater” fee on your statement does not tell you which networks you are actually enrolled in. We have seen merchants billed a bundled monthly fee while their Amex volume was never enrolled at all, because Cardrefresher was never set up.
Mastercard’s own merchant guide, published in 2017 from an analysis of large card not present merchants, puts the share of card not present declines that the service can address at roughly a third. That is Mastercard describing its own product, so treat it as the optimistic end of the range rather than a promise. Even at half that, for a subscription business the arithmetic is not close.
Work out what a card account updater is worth on your own numbers rather than on anyone’s marketing. Take your monthly recurring charges, multiply by your decline rate, and multiply that by your average ticket. If the answer is a four figure number, a forty cent update fee is irrelevant and you should be enrolled tomorrow. If you bill fifteen customers a month, it is a different conversation.
Card account updater pricing is normally invisible. Most processors quote it as a monthly fee and a per update fee and leave it there. One does something unusual: CardConnect publishes both the merchant price and the reseller buy rate in its public CardPointe support documentation. That is more transparency than the industry norm, and it lets anyone see how the fee is built.
Independent industry commentary has put the wholesale range in the same place for years. Per update fees land around twenty to twenty five cents, setup fees between three and five hundred dollars. So a merchant paying forty to fifty cents an update is not being gouged. A merchant paying a dollar is.
The number worth arguing about is rarely the per update fee anyway. It is the monthly fee, charged whether the service returns anything or not. And the setup fee, charged once, and almost always negotiable to zero on a competitive deal.
Every card you have on file gets submitted to the network on a cycle. Only a small fraction come back with a change. CardConnect’s documentation is clear that the per update fee applies only to cards that actually receive updated information, and that cards checked without a result cost nothing.
Not every agreement reads that way. If yours bills per record submitted rather than per record updated, you are paying for the whole file every cycle instead of the handful of cards that changed. On a file of ten thousand stored cards, that is the difference between a fee you would not notice and a fee worth four figures a year. Read the schedule, and if it is ambiguous, ask for it in writing.
This is the part that turns a reasonable product into a line item worth auditing.
None of these card account updater blind spots are exotic. The first one alone accounts for most of the fees we find and remove. The service gets switched on as a boarding default, not because anyone asked whether the merchant could use it.
Five things, in order, and none of them take longer than an afternoon.
On its own, a card account updater fee is small. It matters because it is diagnostic. Consider what it implies. A processor put a card on file service on a card present account. Or billed a monthly fee for an integration nobody ever finished. Or priced a twenty five cent service at a dollar. None of those suggest care was taken anywhere else on the account. Fees like this one are the reason our audits start with the line items nobody reads. If you want ours, see what an audit costs, or read how processing fees are put together before you call anyone.
A service run by the card networks that replaces expired, reissued and renumbered cards in a merchant’s stored card file. Issuing banks report account changes to the network. The merchant’s processor submits its stored records, and the network returns updated card numbers and expiration dates so recurring charges do not decline.
Visa Account Updater, usually shortened to VAU, is Visa’s version of the service. Visa describes it as a secure exchange of account information between participating issuers and acquirers for credential on file merchants. Alongside updated numbers it returns closed account advices and contact cardholder advices.
Automatic Billing Updater, or ABU, is Mastercard’s equivalent. Mastercard scopes it to card not present merchants running card on file and recurring payments. Merchants normally submit a bulk file before authorization and can query a single card through an API after a decline.
Wholesale sits around twenty five cents per updated card. Published merchant pricing at one major processor is forty cents per update plus ten dollars a month. Setup fees, where charged, run from two hundred fifty to five hundred dollars and are usually negotiable to zero. Anything approaching a dollar per update is worth challenging.
It depends on your agreement, and it is the single most important thing to confirm. CardConnect’s published documentation charges only for cards that come back with updated information. If your schedule bills per record submitted instead, you are paying for your entire stored file on every cycle.
Discover is usually carried alongside Visa and Mastercard. American Express is not. Amex runs Cardrefresher as a separate program. It has its own enrollment, its own signed supplement to your Card Acceptance Agreement and its own technical setup. An account updater fee on your statement does not mean your Amex volume is covered.
Yes. Visa’s documentation describes issuers submitting a cardholder opt out advice, or a contact cardholder advice, instead of a new card number. Cardholders can opt back in later. Those accounts will never return an update, which is a normal part of how the service behaves rather than a fault with it.
For a business that bills stored cards on a schedule, almost always. Mastercard’s own analysis of large card not present merchants attributes about a third of their declines to information the service can fix. For a merchant who takes cards in person and stores nothing, the answer is no, and the fee should be removed rather than renegotiated.
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