Setting up a smooth payment system is perhaps the most important task for a business. Delay in making or accepting payments can not only imbalance your cash flow, but also hinders various small operations within your business. The best way to deal with this issue is to start to accept recurring payments instead of using advanced technology and tools like payment gateways. In this article, you will learn how recurring payments work for small businesses. Read on!
Recurring payments offer various perks for both businesses and customers.
What Are Recurring Payments?
Recurring payment refers to a method of payment where customers allow businesses to deduct payments from their bank accounts or cards automatically by arranging payment pre-authorization. The automatic dedication of payments takes place at regular intervals in return for services or goods. The business first receives permission from the respective customer who has chosen the frequency and schedule of payment dedications. Moreover, these types of payments are very common in membership and subscription-based businesses.
Recurring payments are beneficial for both businesses and customers. While customers don’t have to put effort and time to make payments every now and then, businesses can reduce a lot of overhead by automating their payment systems.
If you’re running a small business and want to set up a recurring payment system, then you can look out for an efficient and cost-effective payment system like a payment gateway.
How do Recurring Payments Work?
The most important thing you need for setting up a recurring payment is a merchant account or a payment service provider that allows you to collect online payments from your customers. Meanwhile, your customers can also make payments in a hassle-free and secure way.
Given below are some ways of collecting recurring payments:
- Recurring Invoices
If you don’t want to charge credit card payments from your customers, you can set up recurring invoices instead. It’s up to you how you want to schedule the invoices. The invoices will be sent to your customers as per your decided schedule, and your customers will then clear their dues manually.
There are various POS (Point of Sale) systems and payment processors that help you in automating your payment processing.
- Automatic Payments
In this method, payments are charged from your customer’s card in real-time. For this, you first need to get permission from your customers and then give payment information. Further, the customer also has the option to either provide bank details or use a 3rd party processor.
The automatic payment process takes place once a deduction proceeds without any restriction from the customer side. Here, they receive a payment receipt from the business as proof of payment. In addition to that, recurring payments today require card payment tokenization, as it offers increased security for payment completion, with higher convenience and better speed. This way, you can manage recurring payments without the risk of leaking your account or card details by entering it repeatedly.
How To Manage Recurring Payments?
We have discussed the ways to collect recurring payments from your customers. Let’s now discuss a few things that will help you manage your recurring payment system conveniently.
Offer Multiple Payment Options to Your Customers
Customers of today don’t rely on any single payment method for making payments. Instead, different customers have different preferred methods which they use for various types of payments. So, if your business doesn’t offer the preferred methods of customers, they are likely to abandon their purchase. Hence, it is very important to offer multiple payment options to your customers. These include credit /debit cards, UPI, e-wallets, etc.
Make Sure Customer Information is Secure
Always keep in mind that recurring payments aren’t only about automatically deducting money from your customers’ bank accounts. Before that, you need to provide your customers with a safe and secure environment where they can enter their personal and confidential data like personal information, and bank details without worrying about anything.
Such important pieces of information need to be stored securely on your platform. When it comes to securing data, businesses prefer choosing either in-house or third-party services to preserve sensitive data. The best payment service providers use strict regulations like PCI-DSS compliance to protect your and your customer’s data, while also providing top level card tokenization services which is a must today for efficiency purposes.
In case your database stores a large amount of sensitive data, then a good idea is to use encryption for transactions. And if you’re using any third-party service provider then make sure that their platform is safe and secure. It should meet all the national and international security standards to provide the best payment processing environment to your business and customers. Investing in the right payment security systems will ensure that your business remains free from illegal access, theft, cyber-attacks, etc.
Allow Customers to Decide Payment Schedule
If possible, allow your customers to select the payment schedule according to their preferences. It is very important to understand that customers are also bound to some schedules from their funding sources like salary or income. To make sure they have enough money for clearing the recurring payments, allow them to decide on a schedule i.e., how and when they want their money to be deducted. Letting them choose flexible terms will encourage them to stay longer with your business.
Communicate With Your Customers
When you’re collecting recurring payments from your customers, make sure to maintain proper communication with them. Keep them in the loop and request their feedback via mobile, SMS, social media or other communication channels. Not just that, but also pay attention to all of their comments and make sure to respond to them in a polite but effective way. Moreover, there should also be reliable customer service where your customers can reach out in case of any query or problem. By prioritising your customers by addressing their issues quickly, you can prevent them from facing payment processing problems. In this way, you can also improve your customer experience and conversions in a great way.
Recurring payments allow your business to collect payments automatically from the customers, business partners, and other stakeholders. It provides you with benefits like secure transactions, timely payments, reduced payment processing time, reduced payment processing cost, better customer experience, higher ROI and many more. In a nutshell, recurring payments can help you run your business more efficiently and conveniently. We hope this information helps!