Your Ultimate Guide to Recurring Payments
As a consumer, nearly every person has encountered recurring payments in action. But, as a business owner, have you considered introducing this billing type into your company’s practice? If you are still undecided, this guide is for you. Here we will tackle all the main aspects of this tech solution and explain how to integrate it into your business.
What Are Recurring Payments?
Recurring payments, also known as recurring billing, are regular financial transactions that don’t require a confirmation from the cardholder and are conducted at a prearranged schedule. They are useful for both consumers who purchase products or services on an ongoing basis and for businesses that want to increase their turnover and provide their clients with convenient service.
There are two types of recurring payments:
- Fixed - the same amount is deducted from the consumer in every payment cycle. Some examples are such fixed-price products and services as Netflix subscription, gym membership, magazine charges.
- Variable - the sum deducted might change in every payment cycle. These payments include usage-based billing, like utility and phone bills, and quantity-based billing, such as some cloud storage services.
How Do Recurring Payments Work?
In a nutshell, the recurring billing algorithm is as follows:
- The client selects the recurring payment option on your website and accepts the terms and conditions.
- The customer is then redirected to the payment page, where they need to enter their card information and confirm the transaction.
- The subscription is complete, and the user will be charged automatically until further notice.
Industries That Use Subscription Billing
Generally, a business in any industry can integrate recurring payments. Here are some examples of the niches that use it widely:
- Education - online courses, private lessons.
- Entertainment - series, movies, TV shows, games.
- Financial services - credit monitoring, card maintenance.
- Software - anti-virus programs, CRMs, apps.
- Wellness - gym passes, nutrition, cosmetics.
- Media - content sources, news platforms.
- Communication - dating websites, matchmakers.
- Telecom - regular phone balance recharges, internet services.
- Transportation - city bikes, scooters, car rentals.
Now that you are familiar with the concept of recurring billing, you may be wondering how exactly your business could benefit from it, and we have the answers for you.
Why Your Business Will Benefit from Recurring Payments
Recurring payments have the power of optimizing and speeding up the billing process for a company. Here are the top reasons why so many merchants have implemented this approach into their operation:
- Monotonous workload minimization. Having recurring billing in your company only requires setting up an initial payment schedule and introducing occasional updates if changes occur. Thus, it is a simple process that relieves your staff members from sending invoices manually every month.
- Increasing authorization rates. Fewer transaction declines due to user errors when entering card or password data result in a greater payment acceptance rate.
- Ensuring predictable traffic flow. Overdue invoices impact a business’s cash flow negatively. Recurring payments eliminate the possibility of a client forgetting to pay a bill and make the cash flow predictable. This will enable you to forecast your income and create effective promotion strategies.
- Better customer relationships. Sending out reminder emails or having late payment discussions via phone is a time-consuming and unpleasant task. Luckily, recurring billing doesn’t require any communication from the parties involved, as the process is completely automated. Besides, the clients will have no need to look for payment details and initiate the transaction every time, which results in a better consumer experience.
Subscription payments also show a positive dynamic in improving companies’ revenues. Here are a few reasons why:
- Enhancing consumer loyalty. When clients commit to a subscription, you can rest assured that you will be receiving payments from them permanently until further notice. A great trick for converting clients into recurring payers is to offer a subscription at a discounted price.
- Lower expenses. Using recurring billing is a practice that will enable you to save money on labor costs while improving the quality of the service. It also saves your employees time for more significant issues.
- Smaller installments. Small monthly installments are a lot more attractive to an average client than a large one-time payment. That’s why recurring billing is highly likely to bring you more customers and, consequently, increase your business’s revenue.
All this makes a recurring payment system extremely beneficial for both online and offline businesses.
How to Integrate Recurring Payments in an Offline Business?
Who says an offline business can’t integrate recurring billing? This misconception may derive from the fact that there is no way of confirming a subscription via a POS terminal. Yet, the existence of QR codes solves this issue with ease.
All that an offline business owner has to do is place a QR code at the selling point. Upon scanning, it will forward the client to the subscription page - simple as that!
Another question about recurring payments that arises quite often is connected with credit card expiration - does the subscription end then? Read ahead for the answer!
Dealing with Expired Credit Cards: Account Updater Service
If you are a merchant dealing with recurring charges, expired credit card numbers may be challenging to track. Luckily, an updater program can do it for you!
This service automatically forwards all the necessary information to your business once a client’s card is renewed. Mastercard, Visa, American Express, and Discover all offer a credit card automatic update service that you can avail of. Yet, opting for a package solution, such as Payneteasy Billing API, is advisable for the sake of convenience.
All-in-One Recurring Payments Solution from Payneteasy
Payneteasy is an industry leader in payment optimization. Our easy-to-integrate Billing API offers will enable you to accept subscription payments in no time. Our clients receive our full support and have the opportunity to:
- Test our convenient card registering options through financial and non-financial transactions.
- Enjoy the perks of an integrated credit card updater service.
- Design various payment plans and have the freedom to choose from multiple payment methods available for a single profile (credit cards, IBANs, e-wallets)
- Adjust custom subscription logic features, such as payment currency, sum, frequency, sequence of amounts, and more.
- Facilitate international transactions and comply with PCI DSS.
- Set up reminders and notifications for your clients, alongside internal messages for the payments received.
- Control recurring payments manually if needed for any extra confirmation of charge-off.
Convert one-time buyers to lifelong customers and increase business revenues with the smart all-in-one solution from Payneteasy!