In just the last few years, the subscription-based business model of selling both products and services has proven to be incredibly profitable. From ready to prepare dinner kits to personal care, many new businesses, as well as existing businesses, have hopped on the proverbial bandwagon to adopt this model to increase their profit margins.
What Are Recurring Payments?
A recurring payment may be referred to as recurring billing, a subscription, or automatic payment. It is a payment that is processed electronically on repeat and according to a preset schedule for goods and services. These payments can take place weekly or monthly, depending on the schedule that benefits the business most.
What makes these payments distinctive is the fact that customers do not have to be physically or virtually available in order for the payment to be processed. Rather, customers previously consent to share their personal payment information with a merchant’s payment processor. They also agree to have their credit or debit card charged on an agreed-upon payment schedule.
How To Accept Recurring Payments
To set up recurring payments for your business, you can choose from the following list of providers to get started:
- Payment Gateway
You can sign up for a payment gateway to process payments safely online. However, you will find that a payment gateway could be included with a merchant account or third-party processor that specializes in eCommerce. Costs may vary. You may be required to pay an additional fee or it is included with no monthly fee.
- Accounting Software
For those looking for a bare-minimum solution to eradicate paper billing, QuickBooks and FreshBooks are solutions that can be used to send an invoice for payment to your customer, automatically.
- Subscription Management Software
Chargebee and Recurly are subscription management platforms that operate between the merchant and the payment gateway to handle all issues exclusive to subscription businesses. They take care of cancellations, credit card issues, changes to the subscription, and so much more. This option is a lot pricier and may be more suitable for larger enterprises or businesses with larger volumes.
The steps and the implementation of recurring billing will largely depend on the solution you choose. For now, the basic steps include the following:
- Add a hosted payment page on your website by using a code.
- Integrate a payment gateway on your site.
- Add a subscription management service to your current merchant account.
- Set up ACH recurring payments via your payment processor.
- Enable recurring payment options at the “backend” within your payment processor’s dashboard.
Benefits Of Recurring Payments
Whether you are a growing or an established company, recurring payments offer many advantages for your business:
1. Increase Customer Loyalty
When you have drawn customers to commit to purchasing from you every month, this contributes to long-term customer loyalty. And that translates into predictable revenue.
2. Save More Time In Bill Collecting
Recurring payments eradicates the need to prepare invoices and collect payments. Instead, the process is completely automated, saving time, money, and decreasing errors.
3. Get Paid Faster
By connecting a customer’s billing through an automatic ACH debit or a recurring credit card payment guarantees you get your money faster.
4. Grow Your Business
Subscription businesses will continue to grow due to their convenience and wide range of product offerings and services. Recurring sales means more profit, giving you the means to expand your business.
Ready To Get Started?
With the explosion of subscription services available, the sky is truly the limit in terms of opportunity. Perhaps this business model is something that you are willing to implement right away.
Your first step is to get in touch with your current payment processor to see if they offer this capability and how to implement it. Have an existing site? You also have the option of integrating a payment gateway.