Recurring payment solution is making remarkable changes in online transactions. We are living in the 21st century where technology is really playing a vital role in our lives. It is also changing the ecosystem of payment. If we look back in the past, we did not have flexibilities in the payment option. We had to carry cash in order to make transactions. But, over the course of time, things have been changed. With the advancement of technology, we have now different types of payment modes available. The new ecosystem has brought advantages for both- the consumers and the merchants.
Over the course of time, people have got different ways through which they can make a transaction. One such way is the recurring payment solution. It is also called subscription billing. We are living in an era where credit card and debit card transactions are getting more preferences. But, you might be surprised to know that a recurring payment solution has its own benefits.
With the help of the recurring payment system, the merchants can charge the customers for offering the ongoing services. Some common services that require a recurring payment system are product delivery, gym membership, club membership, online subscription, and many more. Apart from these, if you are into a fundraising campaign, you can use the recurring payment mode to make donations every year. The merchants can charge the customer monthly, weekly, annually, and quarterly. They can even charge the customer on a daily basis. When it comes to the recurring payment solution, the customers, as well as the merchants, get a lot of options for customization.
How To Setup Recurring Payment Solution
A recurring payment system is a kind of online payment that is also called AutoPay. Here, the consumers give permission to the merchants to deduct payment for providing service on a monthly, quarterly, or yearly basis. If you are a merchant and offering repeat service, you should go for a recurring payment solution. It will also help you to maintain the cash flow in your business. You will be able to elevate your business to the next level. However, you can offer different types of recurring payment plan. The entire matter will depend upon the requirements of the consumers.
If you are a merchant and want to accept recurring payments, you must know how to set it up. Setting up the recurring payment system is very important. Otherwise, you will not be able to accept payments through this mode. There are different ways through which you can do it, we have added some of them here. So, have a look at the following points:
Using A Payment Processor
In order to accept online payment, you must pair your business with a renowned merchant processor or payment processor. A payment processor offers different types of pricing structures. You will have to pay credit card processing fees to the merchant processors. Well, you can compare the rates of different merchant processors before choosing the one for your business.
You can set the recurring payment solution through the merchant processor. In order to do it, you will have to open a merchant account under the merchant processor. After that, you will get access to accept recurring payments from the customers. There are different merchant processors such as PayPal, Stripe, International Payment Solutions and many more offering such services.
Using An E-Commerce Solution
Well, if you are running your business online, you must need an e-commerce website. In such a case, if you want to receive money through the recurring payment mode from the customers, you will have to integrate the recurring payment mode using any renowned e-commerce solution. There are many recurring payment solutions available in the market such as Volusion, BigCommerce and many more. They are offering different types of application through which you can do this. For example, if we talk about the BigCommerce, you will need to install some applications such as Rebillia or RecurHub. With the help of these applications, you can easily integrate the recurring payment solution into your business.
Through Hiring A Developer
Well, integrating the recurring payment system is not a complicated task. Companies also have kept it as simple as possible so that every merchant can use this service without facing any complications. However, it might need basic technical knowledge to integrate this service into your business. If you face any sort of problem while integrating this, you will have to hire a developer. They can do this on behalf of you. In such a case, you will have to pay the developers. Moreover, if you are running a big business where frequent customization and integration are required, you will need some additional help. In such a case, you will have to hire developers for conducting the business smoothly.
How Does It Work?
Well, there is no such difference between the credit or debit card transaction and recurring payment transaction. In the case of credit and debit card transactions, the customers will have to give their credit card details every time for initiating the transaction. The customers will have to put the PIN to complete the transaction. But, in the case of recurring payment mode, customers will not have to provide the card details every month. The customers will have to set it up for one time. If they don’t want the service provided by the merchants anymore, they can cancel the recurring payment.
So, how the transaction works? Well, we have elaborated this here:
- After setting up the recurring payment, the merchant processor gets the details of the transaction through the online payment gateway. After that, the payment processor checks everything and sends the same information to the credit card or debit card issuer.
- The credit card issuing company verifies the details and sends it to the credit card issuing bank. If the consumer has enough balance in the card account, the transaction gets approved.
- After approving the transaction, the bank sends the same information to the card-issuing company. The company sends the same to the merchant processor.
This is how the transaction gets completed. Well, it is a real-time process and therefore, the merchant processor charges a specific amount to the merchant. They also offer different types of credit card processing rates to the merchants such as interchange plus pricing, flat-rate pricing, and many more. Depending upon the requirements, the merchant chooses the rate.
Well, the recurring payment solution has gained huge popularity over the course of time. The main reason behind it is that the consumers as well as the merchants get advantages from this payment system. We have elaborated this below. So, don’t miss to go through the following points:
Merchants will get the following benefits:
Mitigates Late Or Missed Payments
Well, in the case of recurring payments, the merchants will not have to wait for the next month’s payment from the customers. Everything is done automatically. After setting up the recurring payment, the merchants will get payments on time. So, it ultimately reduces the number of missed or late payments.
No Payment Conversations With The Customers
Well, recurring payment mode adds positivity to the relationship between customers and merchants. If you are offering any service every month, you will have to wait for the payment every month. Sometimes, you make frequent calls to ask for the payment. It ultimately diverts your mind from the business and therefore, it ultimately hampers the growth of your business. But, in the case of recurring payment mode, merchants will not have to chase the customers for the payment as they will get it on time. They can focus on their business and make the interactions with the customers positive. It will create a solid impression on the customers.
Zero Administrative Cost
The accounting will become easier. You will not have to send an invoice every month and therefore the invoicing cost will be reduced. Moreover, you don’t need to hire any extra staff for accounting.
Customers will get the benefits mentioned below:
Focus On The Need
Customers will not have to look at the wallet before purchasing anything if they choose a recurring payment solution. They will not pay the entire amount at once. The customers will have the option to pay the amount in months. Therefore, customers can completely focus on their needs while purchasing anything from your business.
No Payment Reminder
Well, there will not be any payment reminder every month in the case of a recurring payment system. After setting up the payment, customers will not have to worry. They can enjoy their purchase.
The recurring payment system does not have any sort of complications that the customers might get in other online payment modes. They will have to pay their credit card details and it is done. The recurring payment mode is also good for the environment as there will not be any excess invoice printing. The customers will get the invoice in their mail.
So, this is all about the recurring payment solution. We hope that you have understood the importance of having a recurring payment mode in your business in the 21st century.