Streaming Service Netflix Can't Collect Its Money Because People Have New Credit Cards
Netflix And Slow Growth In The Last Quarter
Netflix, the online streaming company, expected to have more signups in the last quarter, but Netflix ended up having hundreds of thousands less signups than expected. That is signups for the United States, which is where credit cards and debit cards are making the switch from magnetic strips to chips. In matter of fact, that switch could very well be one of the reasons why Netflix didn't get as many signups as it expected.
Netflix reported this back on Wednesday (October 14).
Why Netflix Can't Collect Its Fees
In America, many credit cards and debit cards have a magnetic strip on the back, but there is a major switch currently going on. Strip cards could very well become a thing of the past in America, as banks all around the country are sending out cards with chips embedded in them. So, how does this affect Netflix?
Well, many Netflix users have probably received new cards, and those new cards have new numbers on them. What this means is that Netflix users with new credit or debit card numbers should go into their Netflix account to update their payment information. However, many may not be doing this, and this is why Netflix can't collect its money. Basically, it all boils down to Netflix needing up-to-date payment information from its customers.
Netflix apparently was caught off-guard by this whole switch, but even so, some people seem to be surprised that Netflix wasn't really that prepared, and that Netflix should have been ready to deal with such an issue.
So, should Netflix have been better prepared? Some may say yes, while others may say that Netflix didn't expect this to happened. Netflix may have very well expected that their customers would automatically go and update their payment information. You would think customers would have done it right away, especially if they want to continue to use Netflix.
What Do Card Firms Think About Netflix's Claims
Netflix wasn't the only one that had something to say its situation, as one person who runs a company that processes transactions (small businesses's transactions) said other companies haven't complained about issues that Netflix has complained about.
There are a number of payment industry experts who aren't really that convinced that Netflix's subscription numbers are down because of the new cards. One person said that if this was actually the issue, then other companies that use subscriptions would be affected too.
If customers haven't updated their Netflix account to reflect their current payment information, then they should just do it as soon as possible. If they don't want to use Netflix anymore, then they should just pay what they owe Netflix and cancel out their service.
It will be interesting to see how many subscribers Netflix is able to get in the next quarter. Only time will tell.
- Wall Street Journal
Netflix is facing skepticism from credit card industry executives and experts after the firm said payment miscues contributed to worse-than-expected subscriber results.
Retailers routinely blame the weather for sub-par results. Netflix Inc. came up with a novel excuse on Wednesday: a nationwide transition to chip-based credit cards.
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