Recurring payments are becoming a commonplace among software companies. If you have returning customers paying you monthly, weekly, or annually, automating that transaction process can help to streamline your business. This is a software company’s guide to recurring payment’s.
Often interchangeably referred to as subscription billing, recurring payments are most often suitable for subscription-based services or solutions, though not entirely limited to them. Any software company that has customers returning periodically can offer recurring payments as a convenient option for their accounts and customers.
What are recurring payments?
Recurring payments are pre-scheduled payments that automatically repeat the billing cycle. This could be weekly, monthly, annually or any preferred scheduling.
What makes recurring payments different from a customer payment made in person or processing an invoice is automation. Your customers don’t need to do anything to process their payment each time there is one due. They simply sign up, and you set up the recurring payment processing.
Through a payment processing provider, you input their payment information (debit card/credit card) and set up the prearranged payment schedule. You have complete control, both during and after setup. You can set an expiration date, pause one month (or more), change the amount, or do custom one-offs.
How do recurring payments work?
The first step to processing recurring payments is to find a merchant account or payment service provider. Both solutions help you accept electronic payments, which is how your recurring payments will be processed. While you have these two options, one is much easier than the other.
Payment service providers like PaidYET are one-stop shops for payment processing. They handle all aspects of electronic payments. That means processing, as well as securing and depositing funds into your merchant bank account.
The pandemic, COVID-19 has fueled a rise in subscription plan sign-ups. It’s believed that attempts to avoid checkouts and in-person interactions were a big influence in subscription adoption increases with the US leading the world in these figures.
With that in mind, the most obvious benefit is the customer experience. People can sign up for your services from the convenience of their couch or virtually anywhere and the rest just goes on autopilot.
Various benefits to consider, not just for the consumer are:
Saves Time
Processing credit card payments manually can be a full-time job. Setting up recurring payments allows you to automate that process and regain your much valued time.
The same goes for your consumers. The subscription business model saves them the time having to think and plan their bill payments. They can set them up once and forget about them.
Improves customer retention
A benefit for merchants is minimizing the times a consumer has to think about whether they still want your service. Through subscriptions, many consumers leave unused recurring payments in case they pick it up again next month. Opting out takes more effort than processing the payment, so many don’t bother.
This gives you an opportunity to continue nurturing that customer. You can understand how they engage with you and work to improve it before they opt out.
Predicts cash flow
When you have recurring payments scheduled in a system, it’s very easy to predict cash flow. The predictability can help plan for growth and reduce late payments.
PaidYET’s versatility as a payment gateway and facilitator or modern payment solutions makes it choice for start-ups to small businesses and enterprise sized software companies. Everything you need in a one-stop shop approach. To learn more about how recurring and subscription based payments can help you gain more customers and improve your cash flow, visit us today at www.paidyet.com.
