The nature of recurring payments
Recurring payments are purchases that happen every set period, and the customers need to authorize only once. It means that the client does not need to input the transaction details for each payment cycle. To offer clients this payment solution, a merchant should find a suitable provider such as Maxpay, which can set up this option.
The said payments have two variations:
- Regular or fixed purchases. It refers to the frequent transfers of the same amount. For example, popular streaming services would normally charge a fixed sum per month.
- Irregular or variable purchases. It refers to the cycled payment with the sum varying. Like the utility payments, which usually amount to different sums from month to month.
How it works when you use a payment solution:
|A company installs the right payment gateway or other payment solution to obtain recurring purchases on the website ↓
|A client willingly opts to conduct a transfer recurrently every setup cycle
|The client accepts given policies and inputs the billing data for the current and upcoming purchases
|The payment is verified at the acquiring and issuing banks
|A client receives an invoice of the first purchase and notification, plus a new invoice on every cycle
|A seller receives the amount on a merchant account that later can be settled to a business one
One should understand that setting up a repeating payment must be as easy for the client as canceling it. No business would benefit from having the process complicated and tiring for a cardholder. Before subscribing a client to automated billing, a merchant must be sure to get them well informed regarding the cancellation policy no matter if the company is registered in the USA, Europe, the UK, Germany, etc., you get the point.
Advantages of such payments for a business
- Improve payment cycle. Getting the well-earned funds late is no good for any business. It can damage the revenue flow and also your reputation in the long run. The billing system is set up during the first transaction, and all the other times the funds’ collection is repeated thanks to the agreed schedule. Your enterprise saves time, money, and reputation by not reminding customers to perform the purchase.
- Purchases become easier and cheaper. Automated billing reduces the cost of manual invoicing, as well as transaction processing fees. After the primary establishments, the software takes care of forwarding charge processing.
- Progress with client relationships. As cardholders input the required data once and benefit from the continuous service after, the relation between a client and a brand is affected positively.
- Fraud protection and ensured security. Using this payment system a business can securely store and manage the cardholder’s sensitive info, and minimize the unnecessary duplication plus circulation of private data, preventing various kinds of human error.
By the way, if you are looking for an efficient, secure way of accepting recurring payments, Maxpay is right up your alley! Find out how subscription businesses grow and develop with us here.
What are the types of recurring payments?
They are fixed and variable. The first one takes the same sum every time, and the second one can request different sums depending on the usage.
What is an automatic/recurring payment?
Both terms basically refer to the same process: a repeating transaction agreement between a merchant and a customer.
How do I stop recurring payments?
On the website of the service by opting out, or through your bank.
What are the benefits of recurring payments?
Sellers get stable automatic transactions. Clients receive continuous services and easy transactions.