Recurring payments can be very useful for you and your business, time-saving, convenient, and secure; how will they work for you, how can you use them? Do you know what is meant by recurring, what is a recurring payment? An easy example would be the monthly payments that you make for your TV channel service provider or the monthly regular donations you make to the charity that you support. It’s a subscription an ongoing payment that is processed on a periodic basis for a product or a service.
Who uses recurring payments? Any business that provides a service that requires payment on a regular or a subscription basis, payment intervals could be monthly, daily, weekly, twice-yearly, or even annually. Businesses like:
- Gyms and Sports Centre Membership
- Utility Service Providers
- Magazine Subscriptions
- Software subscriptions
- TV/Internet Service providers
Traditionally recurring would mean setting up a direct debit or standing order and the bank would set the frequency of the payment intervals which would generally mean monthly, but did you know that you can also use a credit or debit card to process recurring payments. There are different solutions available that can help you to accept recurring billing through your website. You have to make changes to your website so that on the payment page the customer accepts to have their card processed on a monthly basis for X number of months, and then the payment technology provider does the rest. Imagine what this can do for your cash flow each month? It can even make positive changes to your operations and give your staff more time to look at more positive aspects of their role rather than collecting payments, they can actually concentrate on providing service!
Benefits of using recurring payments – make payments simpler for you
- Minimal effort – imagine not having to send out invoices at the end of every month. Once you have established the collection frequency for your customers you can sit back and let your software do the rest. The only time you will need to go back to the instruction is to make a change to the billing, the payment will keep going unless it’s told to stop.
- Reduce Late payments – Late payments can be a problem for any business, they affect cash flow, revenue, and even customer relationships, recurring payments help to make these problems a thing of the past. Payments set to repeat at an agreed frequency mean that you don’t have to spend time calling and having those difficult conversations with your customers over unpaid bills. Unless of course, there is a failed payment in the processing cycle but that then becomes a different kind of conversation and is much easier to resolve rather than having the same conversation each and every month.
- Improve relationships with your customers – Imagine having to enter payment details each month to make a payment, recurring payments make it easier for your customers. They literally set up the instruction once and that’s it, they can sit back and forget about it. It also frees up time for your staff to actually focus on looking after your customers and servicing their needs. You will have happy customers and a relaxed workforce.
- Minimize any dangers of fraud – For recurring payments, a customer’s information has to be stored so that it can be processed at the agreed frequency; your provider will have the requirements to make sure that this is done securely. They will most probably use a method called Tokenisation which is where payment information is locked away securely and replaced with a unique code referred to as a token. Swapping sensitive data for non-sensitive data that can then be used in a database or system without the worry of data theft. Your provider should also meet the standards required from the payment card industry data security standards (PCI DSS), you will have definitely read about this in our previous blog posts and on our website but in a sentence, PCI DSS was founded by the major credit card companies and exists to make sure that gateways, merchants, banks and payment technology providers adhere to the required security processes and controls that protect cardholder data and information. It’s an important aspect of taking payments that shouldn’t be ignored.
So do you know how you are going to use recurring payments within your business? Have you thought about it before and not understood how it works or how you could implement it? Did you realize how beneficial it would be to your business and staff to have it in place? It’s a clever tool that you may have thought was only for use with standing orders or direct debits but technologies change and now you can use it on your website either as an integration or as a plugin.