Businesses today have integrated different payment methods to give their customers options when paying for their products or services. Another popular method among sellers and buyers is recurring payment or also known as a subscription payment. This is usually offered by online businesses that have memberships or services that can be bought continuously. Instead of giving their clients opportunities to buy the service from time to time, they use recurring payments to offer discounts and to secure long-term customers. If your business hasn’t integrated this type of payment into your business, now is the time to consider such this method.
What is a recurring payment?
A recurring payment is also called a subscription payment. It a type of payment that automatically charges the client when they subscribe for a particular service or product. There are options to make it monthly, quarterly, or annually, depending on what the business can offer. A recurring payment may or may not need the client’s debit or credit card. There are some applications that don’t need to store the client’s payment details but they need to provide them when the subscription expires. There are also systems that allow clients to save their data so that the vendor can automatically charge against their accounts.
What are the benefits of recurring payments?
Now, you might not think that recurring payments are essential to your business. There are lots of payment methods for your clients and you might think that adding recurring payments to your business will complicate things. Actually, this type of payment is connected to all kinds of methods there are on your website. Whether you are accepting credit cards, ACH, or both, your recurring payment will help you secure your business’s finances.
For those who are wondering, these are the benefits of integrating recurring payments on your eCommerce site.
1) It secures long-term clients.
If you are offering products or services that you think your clients will continue to purchase, recurring payments are good alternatives. One of the benefits of this payment method is that it secures potential long-term clients. What a recurring payment can do is to charge your clients continuously so long as they subscribe to your business. This guarantees that long-term clients are kept without checking on them from time to time. So, for example, if your client subscribed for a year with monthly automatic payments, you can assure that he will stay with you for that long.
2) It guarantees* payment.
Another great thing about recurring payments is that it guarantees payment. (Assuming payment information is accurate and within the terms agreed upon). The typical process when your client subscribed to your business is that he/she will provide their credit card details and allow the recurring payments to continue for as long as they’re interested in your products or services. You don’t have to chase your client when you ask them to subscribe. You are guaranteed that they are willing to pay, especially when they enable the option to automatically renew their subscription.
In guaranteeing payments, you also need to know the difference between credit cards and ACH as payment methods. Your clients will most likely use these two systems when they subscribe to your business. Credit cards undoubtedly provide guaranteed payments since the transaction is reflected in real-time. The payments are also charged against the credit limit of the clients, which are basically unreserved and are readily available for any transaction.
ACH is an alternative to credit cards. In this payment method, you are actually requesting your clients to pay you against their savings account. This means that without their approval, the transaction might not push through. This provides a lesser guaranteed payment.
Nevertheless, recurring payments are like asking your clients for permission so they can pay your business without interruptions on your end.
3) It saves you time.
Handling a business is not just about asking for payments or collecting a sum of monies from your clients. There are also other aspects that you need to focus on. Imagine allocating so much time to collect payments from your clients. You won’t be productive that way. Enabling recurring payments save you time. With this feature, you can automatically charge your clients using an application or a program, which won’t need your interaction most of the time. When you save time from payment collections, you have more opportunities to focus on other important sides of your business. You will be more effective and efficient in the long run.
4) It minimizes late or failed payments.
Since recurring payments are mostly automated, both you and your clients save time from asking and providing details for the payment. Also, it helps your clients pay on time. You can’t rule out the fact that some clients forget about their dues. Especially, if they have other things or more important products or services to prioritize. You can’t send them notifications from time to time as you will sound pushy. With recurring payments, you can minimize late payments. Your clients are expected to provide their payment details beforehand, which gives you an assurance that they are willing to pay. Subscribing to your business with automatic payments also signifies that your clients want to continue their purchase without interruptions.
5) It helps you analyze the changing interests and preferences of your clients.
To know the change of interests and preferences is so important for businesses. The analysis you will get from it will help your business improve and develop new things that will appeal more to your target market. But, how do recurring payments help you analyze your clients’ changing interests? By simply unsubscribing from your offers, disabling automatic renewals, and changing their payment details, you will know that they are not interested in your offer anymore. This will make you wonder what goes wrong or what changes. And with that question, you will look for areas of improvement as a reflex.
Recurring payments can help you in a life of ways. If you want to retain customers and make sure that they pay on time, try integrating this method on your website or overall business model.