Many businesses have a need to collect payments from their customers on a regular basis. Merchants that can benefit from automating their payment collections include subscription-based services like magazines, food box services like Butcher Box, cell phone service providers and membership-based businesses. There are literally thousands of other types of merchants who can save time and money while offering their customers the convenience of setting up automated payments.
What is a Recurring Payment?
A recurring payment is a payment that your customer is required to make at regular intervals. These types of recurring payments can consist of weekly, monthly, or annual payments. They can be set up to occur on whatever schedule works best for your business and your customer. Recurring payments are sometimes referred to as automatic payments. You might have set up automatic payments to pay monthly insurance premiums, car payments, mortgage payments and similar recurring payments. The process of collecting your funds through recurring payments means you don’t need to be physically present or take any further action once you have authorized recurring payments. Your customer shares their payment method such as a credit card or a bank account to be debited. A Merchant Services Provider such as Aurora Payments facilitates the credit card or bank account to be charged based on a payment schedule. There are two types of recurring payments: Fixed payments and Variable payments. With a fixed recurring payment, your customer is charged the same amount at each interval. A variable recurring payment means the amount owed is subject to change from payment to payment, such as with usage-based charges like monthly utilities. Recurring payments provide an efficient way for businesses and their customers to facilitate regularly scheduled payments. This saves time and improves customer retention by creating a better and easier experience.
1. Recurring billing makes sure your funds are paid on-time
Any merchant that collects funds from customers on an ongoing basis can benefit from implementing recurring payments. Whether you charge an annual membership fee once a year or, you operate a gym, rent working space to others, or charge monthly dues for a social club, recurring billing makes sure your funds are paid on-time and automatically. Recurring payments will reduce the time and expense spent on collecting your money.
2. Offering recurring payments can be especially helpful to small businesses with a limited staff
You might think that your business is too small to implement this technology. On the contrary, offering recurring payments can be especially helpful to small businesses with a limited staff. As a prime example, day-care providers can provide the convenience of automated payments for parents who are struggling to find time to sit down and pay their monthly bills. Personal trainers, legal service providers and party planners can benefit from this technology-based solution. As an example, a wedding planner might allow clients to make four equal payments as they plan a wedding.
Recurring payments improve the chance of getting paid on time – without having to send a statement or expend any effort to get paid. Avoid missed payments by automating them.
3. Recurring payments are charged automatically online.
Recurring payments are charged automatically online. Your customer provides payment information to you and agrees to a payment schedule. Payment methods include credit cards, bank account debiting or a payment platform like PayPal. Automatic payments occur when the scheduled charge is processed, and the provided credit card is charged without any action on the part of the customer. The backend process is the same as if the customer had entered the credit card information each time. When a payment is successfully made, a receipt is sent to the customer by email to show the payment has been processed.
4. The benefit of automation offsets the cost of human labor to collect your payments and results in a lower cost overall to collect your funds
Each payment transaction has a small transaction fee. In addition, you will pay the usual interchange rates for the card that was processed. This could include a slightly higher interchange rate for a card-not-present transaction. However, the benefit of automation offsets the cost of human labor to collect your payments and results in a lower cost overall to collect your funds. The process for your customer to sign up for recurring payments is as simple as the click of a link to get started.
Ready to Implement Recurring Payments?
If we have inspired you to offer your customers the convenience of recurring payments, give us a call. Our team is ready to implement recurring payments for you today. Call us at 833-AURORA (833-287-6722) or email us at firstname.lastname@example.org.