10 Ways to Update Your Payment System

How you handle dues and fees can make or break your membership goals.

BY JULIE KING AND JIM SCHMALTZ

West

Popinski

Navigating evolving payment technology and regulations is a common pain point among gyms. But it's crucial to get it right. In a sense, payment systems should be approached with the tech version of the Hippocratic Oath: First do no harm.

“One in three members cancel because they’ve had a bad payments experience,” says Matt Popinski, chief customer and payments officer at Daxko.

To increase collections, reduce friction, and provide a seamless member experience, fitness operators need a proactive, strategic approach. We asked two experts, Popinski and Mike West, SVP of product and payment operations at ABC Fitness, to weigh in with practical steps to master the modern payment process.

1. Make Sure You Have a Card Account Updater

If there is one feature Popinski would place above all others, it is a card account updater—a service that automatically refreshes expired or invalid credit card numbers before scheduled charges. In an industry where the overwhelming majority of payments are recurring and pre-authorized, a single failed transaction can set off a chain of events that often ends in a cancellation.

The risk is not just the failed payment itself. It is the phone call that follows. When a staff member reaches out to a member about an expired card, the member—who may not have visited the facility in months—is suddenly confronted with a decision they had been passively avoiding. Popinski calls this “waking a sleeping giant.”

2. Prioritize Frictionless Payment Experiences

Failed payments cost fitness businesses an estimated 8–12% of monthly revenue.

“Payments should be treated as a core part of the member experience and a lever for growth,” West points out. “Friction in capturing payment credentials at sign-up can negatively impact conversion rates or drive early cancellations.”

That means making the payment process intuitive and potentially shifting from monthly to bi-weekly billing.

To combat this, operators should shift to multi-layered approaches, including:

• Billing alignment with member cash flow;

• Real-time bank account validation;

• AI-powered retry logic that optimizes the timing of reattempt payments; and

• SMS links to update cards and settle past-due balances.

“Gyms need to support a full mix of bank accounts (ACH) and cards—especially debit, which account for about 55% of cards on file—along with digital wallets,” West advises.

"Having a card on file and accessible alternative payment methods is what we should be driving for," Popinski says, “so that [a member] can walk up to the counter or walk up to staff and it’s a frictionless, one-click execution of a payment regardless of the payment method.”

Plus, West adds, “Capturing both primary and backup payment methods can increase collections by 2–3%. These capabilities shift payments from a reactive process to a strategic driver of revenue.”

3. Watch the Neobank Trend Closely

Today’s fragmented payment options include bank accounts, credit and debit cards, digital wallets (Apple Pay, Google Pay), and neobanks such as Cash App, Chime, Venmo, and others. For collections, they each perform differently.

“More than 70% of Gen Z use a neobank, with more than half saying it’s their primary payment method,” says West.

There are challenges. Popinski notes that cards issued through some neobanks carry higher decline rates than those from traditional financial institutions—a function of how those cards are issued and structured.

Collection rates with neobanks can also be problematic, West adds, primarily due to insufficient funds.

“Fitness centers need targeted collection strategies here—like collecting backup payment methods and instituting alternative billing,” says West.

Popinski suggests that one way to help stay in front of these trends is to make sure your payment vendor has a certified payments professional (ETA CPP) on staff. Administered by the Electronic Transactions Association (ETA), ETA CPP is the premier designation for individuals in the merchant services industry.

"It’s like being a CPA," Popinski says. "They’re certified in this space and they must keep up with continuing education in order to provide counsel to clients."

The distinction matters. Payment sources such as neobanks require specialized expertise that a typical banking relationship may not provide.

4. Be Aware of Surcharging Rules

Surcharging—the practice of passing credit card processing fees along to the member—has become common in the fitness industry over the past several years. But it comes with a compliance burden that many operators underestimate.

Rules governing surcharging change frequently. Some states prohibit it outright. Others cap the fee amount. Visa and Mastercard conduct secret-shop inspections to verify compliance. Members who believe a club is violating the rules can report it to their state attorney general, who can in turn escalate to the card brands—resulting in potentially significant fines.

"Executing payment services like surcharging outside a fully compliant solution is a risk that club operators certainly need to make sure their eyes are wide open [to]," Popinski says.

He advises that facilities rely on member management systems and payment providers that actively track and adapt to card and state-level regulations, and act as a compliance safety net for the club.

5. Maintain Compliance With Cancellation Regulations

The regulatory push for “click to cancel”— digital cancellation processes—has put fitness facilities in a complicated position. Fitness memberships aren’t standard subscriptions, and the operational and legal considerations around cancellation are genuinely different from those involved in canceling a streaming service.

With regulatory scrutiny of click-to-cancel laws and the rules of NACHA (one of the two major ACH networks in the US) mandating stronger risk and fraud compliance, operators should remain proactive regarding transparency, consent, and cancellation processes.

West recommends:

• Clear billing terms and member consent;

• Simple, compliant cancellation processes; and

• Adherence to NACHA, PCI (payment card industry), and card network rules and standards.

Popinski acknowledges that federal regulations in this area are moving targets, and that implementing changes in complex software systems takes time. But the goal—a member experience that is consistent, transparent, and equally accessible on the way in and on the way out—is one he sees as both achievable and necessary.

6. Chargebacks and Dispute Management Should Be Embedded in the System

Chargebacks—member disputes over charges, often tied to cancellation claims—are an unavoidable part of the business. The fitness industry has relatively low chargeback rates compared to other sectors, but when disputes do arise, having the right tools in place matters.

"Chargeback mitigation and dispute management should be embedded in the member management system," Popinski says.

He recommends that operators look for providers that offer chargeback services—meaning the provider will advocate on the club’s behalf with card brands, gather required evidence, and manage the dispute process.

In most cases, he notes, the evidence required is straightforward and readily accessible: documentation of the club’s published cancellation policies, communication records, and transaction history.

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7. Hold Your Payment System to the Same Standard You Demand as a Consumer

If Amazon can make purchasing effortless, if your bank app can process a transfer in seconds, your member management system should feel just as current.

"I’d ask clubs and gyms to make sure their payment systems are as efficient as those they use outside of the health and fitness space," Popinski says.

At the heart of it all is trust and transparency.

"Members need to trust the process, Operators need to trust their partners. And the system needs to earn that trust every time a payment runs."

8. Demand Full Fee Transparency When Choosing a Vendor

Popinski’s advice to operators reviewing or selecting a payment partner is direct: Do not accept a single-line item labeled “total processing cost.” Push for full transparency.

"I would counsel clubs and gyms, because costs are so high, to have full transparency into those billing components," he says. “Seeing just a line item for total processing costs, I would double-click on that and say, ‘I need to see it line-itemed.’”

Full transparency means having visibility into interchange rates, card qualification categories, return fees, and all other components that affect what a club actually pays per transaction. Some acquirers, Popinski notes, provide this level of detail on every charge. Operators should expect nothing less.

9. Apply the Same Security Standards to AI as to Payment Data

AI has been embedded in the payments industry for decades; fraud detection, interchange qualification, and funding guidelines have long relied on machine learning algorithms. The risk, Popinski says, comes when operators layer generic AI tools on top of their member management systems without accounting for the security infrastructure that sits underneath.

"If you have a standalone AI solution that is just integrated into a website application, it’s missing the security infrastructure that is presented through the member management system in concert with the processing environment," he says. “Those have to be absolutely locked down and bulletproof.”

He says that the concern is top-layer data scraping—AI tools that access visible data without the encryption layers that protect sensitive payment information.

Popinski urges operators to evaluate AI tools the same way they would evaluate any payment integration: by asking whether it is deeply embedded with the member management system, not just connected at the surface.

10. Future-Proof Infrastructure

West believes that future-proofing your payment system doesn’t always require a replacement. But you do need a flexible infrastructure that can adapt to consumer expectations, new payment methods, and regulatory demands.

Modern platforms should support:

• Multiple revenue streams (dues, retail, training);

• A broad mix of payment methods;

• Integrated reporting and analytics;

• API flexibility for customization; and

• AI integration, including predictive billing, intelligent retries, and personalized member communication.

“Being future-ready is less about replacing systems outright and more about ensuring your payments infrastructure is adaptable and extensible,” West says.

Health & Fitness Business is a publication of

Health & Fitness Business (HFB) is the leading health and fitness industry publication. Published monthly by the Health & Fitness Association (HFA) and distributed free to the industry, HFB offers analysis of the opportunities, challenges, issues, and news that impact the industry.

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