During a recent announcement, Netflix blamed a drop in customer growth in the U.S. to new, EMV credit cards.
According to Bloomberg, the media giant's stock fell as much as 7.4 percent since the push to convert to embedded chip cards.
In the third quarter of this year, Netflix brought in 880,000 new, domestic customers, well below Bloomberg's prediction of 1.25 million, worrying investors.
"This is a subscriber-driven story so any slowdown, for whatever reason, is a cause for concern for Netflix investors," said Bloomberg Intelligence analyst Paul Sweeney.
In a statement, Netflix chief executive officer Reed Hastings explained that, as customers received their new credit cards, they were unaware that the change required them to update their billing information. As a result, Netflix was unable to collect many subscription fees, in what Hastings is calling "involuntary churn." He's confident, however, that the matter will be sorted out in a few months and that those customers will return.
"There was a relative surge we didn't anticipate correctly around this conversion to more secure chip-based credit cards," Hastings told Bloomberg. "It's a minor tactical issue. We'll be through it in a couple months. Next year everyone will have chip-based cards."
Credit card issuers are currently in the process of replacing their customer's cards with new, EMV cards. Even thought the account number, in most cases, remains the same, elements like the expiration date and CVV security number will likely change. If customers don't update their billing, businesses with automatic renewals, like Netflix, won't be able to receive their income.
If your company in need of new credit card processing software, be sure to contact 911 Software today.