Fintech Insights

Recurring payments and the virtue of routine

July 08, 2019

Are you spending too much time struggling with billing hassles, and not enough time focused on what inspired your dreams? You’re not alone. Learn how businesses are using recurring payment processing to make payments easier and add to their bottom lines.

You’ve established customer trust by offering value worthy of an ongoing relationship, and your customers are prepared to reward you with steady predictable income. That’s great news. Now you need the tools to connect the financial dots that lead to your bank account.

When it’s time to bill your customers, you want to manage the process simply and efficiently. When it’s time for customers to pay, they want that experience to be easy, free, and transparent. Routine may seem boring on the surface. But when it comes to ease of payments, there is great virtue in routine.

How recurring payments work

Recurring payments allow payment for goods and services over time with a single payment authorization. Recurring payments structure a payment relationship between you and your customer on an ongoing basis: weekly, monthly, quarterly or annually. You’re free to spread out equal payments in whatever arrangement is most convenient for your business.

Recurring payments can be set up with credit cards, debit cards, direct debits from checking or savings accounts via ACH or via a growing list of alternative payment methods like digital wallets. That automation can save your business significant time and expense versus managing billing and payments manually.

Recurring payment transactions are processed the same as regular transactions, except that they’re pre-scheduled and pre-authorized by the customer. Funds reach your business account quickly and—most importantly—on a scheduled basis. That predictability makes planning easier for both everyday expenses and the investments need to grow your business.

Recurring payments elevate customer service

Smart businesses of almost every imaginable type are coming to the conclusion that the ability to make payments automatically is the new consumer normal. Today, asking your customers to repeatedly enter the same payment and contact data is a classic case of unnecessary and potentially damaging friction.

Offering automated payments can mean the difference between a repeat customer and a lost opportunity. Smart and responsive businesses are rapidly adopting recurring payment solutions as a proactive upgrade to their ability to deliver exceptional customer service. Offering recurring payment options to your customers shows that you’re adapting to their evolving expectations. That’s service that can help strengthen your brand’s relationship with your customers.

Recurring payments streamline operations

Entrepreneurs want to pursue their dreams—not spend their days with billing operations. But billing is a necessary means to the important end of getting paid. Billing and accounts receivable are operations that can quickly add complexity and cost if not managed properly.

Billing operations should be as simple and streamlined as possible. Late payments are classic friction for business that can quickly throw budgets off track. Managing manual payments represents an ongoing hassle and expense for businesses even in the best case.

Recurring payments help streamline operations and reduce friction for both you and your customers. When your customers think of your business those thoughts should be about satisfaction and delight—not about payment hassles.

How to increase authorizations and reduce declines

Customer payment methods are routinely updated with new account numbers and expiration dates. That means declines will occur, and that puts your relationship with your customer at risk. At minimum, declines should alert you to the problem in order to initiate a dialog with your customer. Navigating and updating customer billing, payment, and contact details should be clear and routine.

Recurring payment solutions should help your business optimize approvals, minimize attrition, and boost the revenue potential of your payments stream. Worldpay helps our merchants recover initially declined card-on-file and recurring payments with automatic account updating and authorization recycling services. Intelligent recurring payment processing produces fewer declines, reduces time dealing with problems, and helps your business keep more of what it earns.

What types of business are growing with recurring payments?

Even as recently as a decade ago, recurring payments were mostly limited to utilities, newspapers, sports team season tickets, fitness clubs, or movie rentals. Subscription billing was almost exclusively the domain of larger merchants. Today, all that’s changed. Subscription business models are driving growth in businesses of every size and type imaginable.

Subscription-based businesses are making headlines beyond the business pages. Recurring subscription payments are fueling the explosion in direct-to-consumer “in a box” businesses—everything from personal grooming to prepared meals to pet food. Software-as-a-Service companies are not limited to software downloads, with websites offering everything from accounting to legal software supported by subscription billing.

Recurring revenue models create predictable revenue flows that can increase the lifetime value of a customer and reduce the costs of customer acquisition. Recurring payments are also more likely to put revenue in the hands of merchants before goods and services are delivered, helping cash flow and your ability to grow. Recurring payment arrangements help create “sticky” customers, promote a positive brand image, and reduce customer churn.

Finding the right recurring payment solution

One-size-fits-all solutions may make sense for a cookie-cutter business. Your recurring payment system should offer customizations that reflect the way your business works. If you want to change billing cycles from monthly to quarterly, offer discounts and promotions, or extract customer intelligence from your payment data, your financial infrastructure needs to work the way your business works.

Be sure to ask questions when evaluating options for recurring payment service providers. Look for a provider that has the experience tools that are flexible, customizable, and affordable. Ask about how any provider helps to protect your business with secure payments that reduce the risks of fraud with tools like tokenization, best practices like compliance with the Payment Card Industry Data Security Standard (PCI DSS) and fraud-fighting technologies with a specific emphasis on recurring payments.

Recurring payments creates a new layer of goodwill between your business and your valued customers, spawning a virtuous cycle of trust. When done right, recurring payment processing keeps customers happy while allowing you to manage your business more efficiently.

At Worldpay we understand that smart business owners require payment solutions that support easy yet reliable business operations. Discover the virtue of making payments easy. Connect with one of our payments experts today to learn how easy it is to set up recurring payments for your business.