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Recurring payments is a payment mechanism that aims to facilitate recurring payments
How to set up recurring payments.
Thanks to this solution, customers of various online services can one day save their payment data on the resource and no longer enter them - the system will generate a payment automatically. Which business needs to set up recurring payments - read the PaySpace Magazine article.
What are recurring payments?
Recurring payments is a process in which a merchant / service provider automatically withdraws funds from a customer's account for a specific product / service at the same frequency. The payment schedule is negotiated in advance and requires a one-time permission from the client to further withdraw his funds. When a customer receives a product / service for the first time, he must enter his card details. All subsequent transactions will take place automatically.
Which business needs recurring payments?
entertainment for adults
dietary supplements
web hosting
mobile operators
One of the main goals of such a payment model is to make the payment process more convenient. The client can consume the services without worrying about the monthly payment. However, convenience can turn into a disadvantage. After all, such a payment model is often associated with a high degree of risk.
Why are there high risk recurring payments?
After the cardholder has agreed to periodically withdraw funds from his account, heightened risks appear in the payment model.
Firstly, the client can forget that he signed up for a service and agreed to periodic withdrawals.
When the provider once again charges such a client a fee for the service provided, he will ask for a refund or even issue a chargeback. If the number of chargebacks exceeds a certain threshold, the business runs the risk of paying a serious penalty to the payment system (Visa and Mastercard closely monitor the return of funds in retail).
Payment systems offer to keep merchants safe by writing all the details in the "Terms and Conditions" chapter. However, before clicking the "Accept Terms" button, not all clients carefully read this part. And even if they do, there is a possibility that even then they will forget about the agreement and will be extremely surprised at the fact of withdrawing money from their account.
Secondly, in the event of an error, it cannot be corrected.
In the case of one-time payments, an error in the amount or other inaccuracy can be quickly corrected. In the case of a recurring payment, the consumer will be forced to pay for the service, and only then demand a refund. This, in turn, will have a bad effect on the chargeback history of the service provider.
Therefore, it is most rational to use the mechanism of recurring payments for those providers whose services cost does not change, but payments are made according to the same schedule.
Third, the client may want to terminate the contract
Often, recurring payment agreements are perpetual. Therefore, to stop paying for the service, the client will have to terminate the contract by first figuring out exactly how to do it. This can also lead to complaints and negative attitudes towards the brand in the future. Therefore, it is better to discuss all the conditions of a recurring payment with the client in advance and write it down in the agreement.
What do merchants expect when choosing a recurring payment provider?
Flexible settlement terms
Sellers want to be able to change the terms and conditions of recurring payments. For example, marketing agencies want to charge immediately after a customer has used a package, rather than necessarily at the end of the month.
The ability to create an unlimited number of batch plans
Suppliers are looking for a payment system that will allow you to create an unlimited number of batch plans and match them with the terms of recurring payments.
The ability to “Retry”
In the event that the initial payment did not go through, this is an extremely important option. The service provider is interested in this option, especially with the ability to retry without contacting the customer.
Types of recurring payments
Benefits of recurring payments
Saving customer base
A customer who subscribes to your service is more likely to become a regular customer.
Save time
The client's payment details are requested only once, this will save a lot of time for the service provider and user.
Income forecasting
By analyzing the number of customers with a subscription, a merchant will be able to predict future income.
Increase cash flow
A recurring payment facility is one of the best ways to maintain a stable source of income.
Let's summarize
Recurring payments are a great solution for your business, but there are pitfalls to keep in mind. Do your best to achieve full transparency and convince clients to carefully read all the terms of the contract. Offer many options and diversified packages for the provision of goods and services, and try to make the payment process simple and convenient.
How to set up recurring payments.
Thanks to this solution, customers of various online services can one day save their payment data on the resource and no longer enter them - the system will generate a payment automatically. Which business needs to set up recurring payments - read the PaySpace Magazine article.
What are recurring payments?
Recurring payments is a process in which a merchant / service provider automatically withdraws funds from a customer's account for a specific product / service at the same frequency. The payment schedule is negotiated in advance and requires a one-time permission from the client to further withdraw his funds. When a customer receives a product / service for the first time, he must enter his card details. All subsequent transactions will take place automatically.
Which business needs recurring payments?
entertainment for adults dietary supplements web hosting mobile operatorsOne of the main goals of such a payment model is to make the payment process more convenient. The client can consume the services without worrying about the monthly payment. However, convenience can turn into a disadvantage. After all, such a payment model is often associated with a high degree of risk.
Why are there high risk recurring payments?
After the cardholder has agreed to periodically withdraw funds from his account, heightened risks appear in the payment model.
Firstly, the client can forget that he signed up for a service and agreed to periodic withdrawals.
When the provider once again charges such a client a fee for the service provided, he will ask for a refund or even issue a chargeback. If the number of chargebacks exceeds a certain threshold, the business runs the risk of paying a serious penalty to the payment system (Visa and Mastercard closely monitor the return of funds in retail).
Payment systems offer to keep merchants safe by writing all the details in the "Terms and Conditions" chapter. However, before clicking the "Accept Terms" button, not all clients carefully read this part. And even if they do, there is a possibility that even then they will forget about the agreement and will be extremely surprised at the fact of withdrawing money from their account.
Secondly, in the event of an error, it cannot be corrected.
In the case of one-time payments, an error in the amount or other inaccuracy can be quickly corrected. In the case of a recurring payment, the consumer will be forced to pay for the service, and only then demand a refund. This, in turn, will have a bad effect on the chargeback history of the service provider.
Therefore, it is most rational to use the mechanism of recurring payments for those providers whose services cost does not change, but payments are made according to the same schedule.
Third, the client may want to terminate the contract
Often, recurring payment agreements are perpetual. Therefore, to stop paying for the service, the client will have to terminate the contract by first figuring out exactly how to do it. This can also lead to complaints and negative attitudes towards the brand in the future. Therefore, it is better to discuss all the conditions of a recurring payment with the client in advance and write it down in the agreement.
What do merchants expect when choosing a recurring payment provider?
Flexible settlement termsSellers want to be able to change the terms and conditions of recurring payments. For example, marketing agencies want to charge immediately after a customer has used a package, rather than necessarily at the end of the month.
The ability to create an unlimited number of batch plansSuppliers are looking for a payment system that will allow you to create an unlimited number of batch plans and match them with the terms of recurring payments.
The ability to “Retry”In the event that the initial payment did not go through, this is an extremely important option. The service provider is interested in this option, especially with the ability to retry without contacting the customer.
Types of recurring payments
- Regular recurring payments
These payments are made according to a specific schedule. For example, you pay to provide certain services at the beginning of each month. The same goes for weekly, quarterly and annual payments. - Irregular recurring payments
Such payments are made according to a certain principle. The service provider does not charge funds from the client's account once a month or once a week, but does so as the services are provided.
Benefits of recurring payments
Saving customer baseA customer who subscribes to your service is more likely to become a regular customer.
Save timeThe client's payment details are requested only once, this will save a lot of time for the service provider and user.
Income forecastingBy analyzing the number of customers with a subscription, a merchant will be able to predict future income.
Increase cash flowA recurring payment facility is one of the best ways to maintain a stable source of income.
Let's summarize
Recurring payments are a great solution for your business, but there are pitfalls to keep in mind. Do your best to achieve full transparency and convince clients to carefully read all the terms of the contract. Offer many options and diversified packages for the provision of goods and services, and try to make the payment process simple and convenient.
