What Is Recurring Payment Processing and How Does It Enhance Your Workflow?

Recurrent Payment Processing is a key component of modern business models. Today, most of us rely on recurring payment solutions for streaming services, gym memberships and other similar subscription services regardless of industry.

Since recurring payment processing is cycled, and automatically deducts payment from bank accounts, it does not require the user to be constantly reminded about the due payment. In this way, recurring payments make the lives of the customers convenient and stress-free.

The concept of recurring payments drives business efficiency as well. When businesses turn subscription-based, it allows for a better cash flow. Thus, recurrent payment processing creates a win-win situation for both the company and the customer.

What Does Recurring Payment Processing Mean?

Recurring payment processing enables business to collect payment from their customers automatically. It automates payment management and makes it more efficient. With this model, your company doesn’t need to manually track customer payment details or remember their subscription dates. Similarly, you customers do not have to worry about delaying or missing a payment as well, since everything will work on autopilot.

How Are Recurring Payments Processed?

It all begins with the customer subscribing to a service. When the customer agrees to the service’s terms and conditions, and makes a payment, a chain of automated processes begin behind the scenes.

• The customer’s billing information such as the bank account details are stored in a payment gateway.
• The gateway encrypts this information to prevent leakage or frauds.
• Information like the payment amount and the payment collection dates is also stored.
• The payment gateway checks in with the bank or the credit card provider for payment confirmation.
• After approval, the payment is transferred from the customer’s account to the merchant’s account.
• The payment gateway notifies the subscription platform of the funds transfer. The subscription platform gives the customer access to the subscribed service.
• On every scheduled subscription renewal date, the recurring payment gateway automatically processes the transaction. This continues in a loop until the customer ends or cancels their subscription.

What’s more interesting is the fact that all of this process takes place in just a matter of seconds! That is how a reliable recurring payment processor delivers a seamless transaction experience to the customers and business alike.

Ways to Process Recurring Payments

There is more than one way to access recurring payment solutions. You can do that through either:

Accounting Software

Accounting software like QuickBooks or Xero work best for small businesses with a limited number of customers. If your company has a complex financial scenario, then accounting software is not the solution for you. That is because this software lacks advanced billing tools, and need manual intervention to oversee the transactions.

Payment Gateways

A payment gateway is a key component in recurrent payment processing. However, a single payment gateway integration cannot be relied upon. It is best to have integration with multiple payment gateways. This is because no one payment gateway allows all types of transactions. Moreover, gateway failures are likely to happen. If your company has a sizeable subscription influx, a gateway failure might prove very costly to you.

Subscription Management Software

A subscription management platform, like SubscriptionFlow is equipped with state-of-the-art billing features, including recurring billing. It is optimum for high-velocity recurring subscription handling. A great subscription management software integrates multiple payment gateways, saving you from trouble even if one of the gateways stops working temporarily. Furthermore, this software offers you access into your company’s financial insights to improve your decision making.

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An Insight into Recurring Payment Processors

The role of a payment processor is to transfer the funds between the customer and the merchant. It links your business to the available payment technologies. It processes the customer’s credit card or bank account data and authorizes it for the transaction. It also offers access to multiple payment options such as ACH processing or e-wallets such Apple Pay and Google Pay. Famous examples of payment processors are PayPal, Stripe and Authorize.Net. Each of these platforms offer their own unique perks, integrations and pricing plans. Check out our blog PayPal vs. Stripe vs. Authorize.Net to learn more on this.

Payment processors play an essential part in recurring billing. They equip your business with the right tools to create recurring payment plans, and also securely manage the customer data.

A payment provider is equally significant in recurring payment processing. A payment provider oversees the entire billing process. It entails providing access to the payment gateway, processing the payment, preventing fraud, and invoicing. The payment provider deals with both the payment processor and the payment gateway to ensure a smooth transaction.

Here are some services offered by the payment providers:

• Fraud protection
• Chargeback protection
• Customer identity verification
• Multiple payment methods (credit cards, digital wallets, and more.)

PayPal, Stripe and Adyen are some popular payment providers.

Which Companies Make Use of Recurring Payment Processing?

Recurring payment processing is inevitable for any business which deals with a load of subscriptions. If your company gives out pricing plans or memberships to your customers, which requires them to pay at specific intervals, you are friends with recurring billing. Some popular cases dealing with recurring billing are as follows:

 Digital Content Platforms

Platforms which offer streaming services such as Netflix or Prime Video often have subscriber bases. The same goes for online education providers, digital magazines or exclusive content provider platforms. These platforms utilize recurring payment solutions to manage their subscriptions, and seamlessly deliver services to the devices of their eager subscribers.

Subscription Boxes

Subscription boxes like Birchbox that make recurring deliveries to their customers also benefit from recurring payment processing. These boxes provide customers with a personalized set of items on a monthly basis.

SaaS Businesses

SaaS businesses are prime examples of platforms which leverage recurring billing processing. SaaS companies are lifting the subscription economy sky-high by upgrading the subscription management and billing practices. Some famous examples of such companies are Zoom, Mailchimp and HubSpot.

What Does Your Business Gain from Recurring Payment Processing?

Recurring payment processing is a revolution in the billing industry. It guarantees you seamless payments. This technology has simplified the transaction experience for the customers and businesses alike. Thanks to the recurring payment solution, automation has replaced the need for manual input in transaction processes. It has minimized the risk of potential errors that could result from manual interventions.

These are the key benefits that recurring payment processing delivers to your company:

Reduced Cost and Time

Recurring payment processing empowers your company’s employees to focus on high priority areas to boost productivity. It frees them of manually keeping track of subscription transactions and payment collection. This saves the company bucks which would have been allocated for manual payment processing.

Predictable Revenue Influx

With recurrent payment processing, the possibility of late or missed transactions becomes nil. Even if payment failures occur, the system would make automated retry attempts according to the pre-set payment protocols. This improves the cash flow of the business. Once a customer makes a lasting subscription with you, they get freed from constant involvement in the transaction process. Due to this mechanism, even if the subscribers forget to pay at the specified time periods, the payment gets fetched automatically from their accounts.

In this way recurring billing makes way for stable recurring revenue. A consistent and predictable income flow enables the business to think ahead with increased confidence.

Minimized Payment Disputes

The recurring payment solution minimizes the risk of dispute charges. Dispute charges arise when a customer feels that the amount charged on their credit card is unauthorized or incorrect. They might also arise when the customer does not get access to the services they subscribed for. Hence they demand the money to be refunded to them.

Payment disputes might arise due to human errors in manual transaction handling. Recurring payment processing eliminates all these errors, reducing the likelihood of refund demands. The payment service providers also offer fraud protection that secure the merchants against fraudulent transactions.

Improved Customer Retention

Recurring payment processing makes your business customer-centric. It makes the lives of the customers stress-free by simplifying their transaction process. They are even saved from the bugging of constant payment reminders.

Customers are also offered convenience as they get rescued from typing out their payment details each time the subscription fees are due. Moreover, as soon as the payment gets fetched automatically from their wallets, they get a quick and seamless access to the services. There is no waiting period in between. Through this, the company fosters trust with its subscriber base.

Improved customer experience means improved chances of customer retention.

Flexible Payment Terms

Through recurring payment processing, you can offer your subscribers increased personalization. Your customers have a variety of subscription plans to choose from. They can select the plans based on their own schedules and budget management. Of course they can make changes to their plans whenever they wish to.

Furthermore, the subscribers can choose their mode of payments i.e. credit cards or virtual terminals such as PayPal. They can also manage their accounts with increased convenience, promoting a sense of ownership and trust in the service.

Financial Transparency

Since the recurring transactions are automated, the subscribers can check for themselves the payment amounts and their dates of occurrence. This is because they are notified after every transaction takes place. This fosters a relationship of trust between the customer and the company. Moreover, the customers are empowered to change or cancel their subscriptions whenever they see fit.

Data-Driven Decisions

Recurring payment processing works like oxygen for advanced subscription models. These models, in turn, generate invaluable data for your business to flourish. It allows you to gain insights into customer patterns, revenue prediction, churn rates and more, and enables you to make well-planned and strategic decisions.

Thus, recurring payment processing does all of this, and more for your ever-growing businesses. If you’re still unsure about how recurring payment processing might help you, let SubscriptionFlow lead the way!

Recurring Payment Processing with SubscriptionFlow
SubscriptionFlow’s recurring billing service supports your business’s growth through the following features:

• Automated Subscription Payments
• Multiple Payment Gateways
• Multi-Currency Support
• Numerous Localized Payment Methods
• Customer Transaction Data Tracking
• Retention Management

Book a demo with SubscriptionFlow today in order to get on-board with all these perks and many more!

Conclusion

Recurring Payment Processing is a robust technology which streamlines your business’s subscription services, by automating your entire billing and invoicing processes. It boosts your business growth by letting you handle massive subscription numbers. It offers countless benefits to your business such as improved cash flow, flexible payment terms and an overall seamless customer experience. Register with SubscriptionFlow to utilize the best that recurring payment processing has to offer.