When you’re a merchant for whom every penny counts, you need to provide your customers with as much flexibility as possible when it comes to how they transfer money to you in exchange for your goods and services. Whether you mostly do in-person or online credit card processing, this necessity remains the same. Fortunately, you can seamlessly accept recurring payments with card-on-file transactions, a recent innovation in the payments world that will help your business increase cash flow and run more smoothly.
What are recurring payments?
Think of this arrangement in terms of a subscription that your customer opts to purchase. In order to set it up, the two of you agree upon exactly how much money will be withdrawn from the buyer’s bank account (and at what intervals). Once this is agreed upon, both of you will know precisely what funds will be withdrawn, when the transaction will occur, and when the arrangement will come to an end. (In many cases, you can leave it up to the customer to contact you when they no longer want to pay on a schedule.)
Major advantages of subscription-as-a-service (SaaS) payments.
Whether your customer is purchasing child-care, cosmetics, wine, weight-loss products or a myriad of other items or services, Recurring Billing Programs come packed with advantages for each party involved.
• Predictable income for you. Since the amount, time, and duration of payments is pre-set, you know exactly how much cash will be flowing into your account and when.
• Convenience. Because the payment process is completely automated and decided ahead of time, you and your customer can, “set it and forget it.” The days of chasing down late payments and sending out manually written bills can finally be over.
• Facilitates long-term relationships with your customers. Unlike with a one-time sale, subscriptions create regular contact. Customers continue to receive bills and payment reminders on a fixed schedule, as well as consistent delivery of your products or services. That means you are a regular visitor in their home and can remain, “top of mind.” Furthermore, should you begin to offer additional products that serve to enhance those they are already buying, it’s easy to give your recurring billing customers the opportunity to augment their purchases.
• Lower customer acquisition costs (CAC). Of course, you should always continue marketing to new buyers. However, the right Recurring Billing Program will also allow you to have a growing foundation of subscription-holders you can count on as you expand your business.
Recurring billing explained.
Even the initial setup for recurring payments is straightforward. That being said, there are a few different models to choose from.
• Use your merchant account as a repository for subscription payments. This is the same place where your payment processing company deposits your customers’ credit card payments after removing any fees, of course.
• Harness the power of your payment gateway. If you have an ecommerce site, you probably already use one of these online applications that facilitate your customers’ secure online payments. The good news is that most gateway providers are also happy to help you accept recurring or subscription-based payments. Best of all, they take care of everything, including PCI compliance, payment processing, and deposits.
As you look at merchant services companies to partner with, it is important to keep these options in mind so you can make the choice that is best for your business.
Offering your customers more than just one-time billing provides benefits to your business and to them. Furthermore, incorporating this payment method into your existing business model and payments software isn’t nearly as complicated as you might think. Start the process of offering recurring payments today! Your customers will thank you and so will your bottom line.