If you want to offer online recurring payment service to your customers, it’s important to explain what recurring billing is and how does it work. In the following article, let’s focus on recurring monthly payment and explore the way monthly billing benefit your business.
What Is Recurring Billing?
Recurring billing happens when a merchant automatically charges a customer for goods or services on a prearranged schedule. Recurring billing requires the merchant to get the customer’s information and permission. The vendor will then automatically make recurring charges to the customer’s account with no further permissions needed.
Any good or service that a customer subscribes to with regularly scheduled payments might be a good candidate for recurring billing. Examples include cable bills, cell phone bills, gym membership fees, utility bills, and magazine subscriptions. Recurring billing may also be referred to as automatic bill payment.
Recurring monthly payment and monthly billing
Recurring monthly payment, or monthly billing refers to subscriptions charged on the same date each month every month, for as long as that subscription is active. As repeated transactions that are scheduled on a monthly regular basis, any time a consumer has a continued service or product purchase, they may opt for a subscription or recurring payment plan. Once a buyer inputs their preferred payment, the merchant will use this information to charge the customer and deliver goods. In Short, recurring monthly payment is a scheduled money transfer that happens automatically on a monthly circle.
What products and services use Recurring monthly payment?
There are many use cases forrecurring monthly payment, some of the most commons are as follows:
Subscription services: This could include media products like newspapers, magazines or streaming services, subscription box services like Dollar Shave Club or Blue Apron or SaaS products like Shopify or WordPress. Most subscription services feature fixed recurring payments at monthly intervals.
Membership services: There are lots of different kinds of membership-based businesses that use recurring payments to operate more efficiently, including gyms, coworking spaces, social clubs and professional organizations. Like subscription services, membership payments are typically fixed recurring payments at either monthly or yearly intervals.
Government and municipal services: Offering recurring payments can ensure things like taxes and utility bills are collected in a timely manner. These types of repeating payments may vary from statement to statement in terms of cost. Specific examples include gas, water and electric bills, property tax bills and student loan payments.
1:1 services: 1:1 services are those in which the provider is being compensated for its time. Examples include legal services, tutoring, childcare, cleaning services, personal training or any other type of 1:1 service that typically occurs at regular intervals. Offering recurring payments in these scenarios makes the transaction as seamless as possible.
Financial services: Recurring payments can play an important role when it comes to personal finance, especially in terms of saving and planning for retirement. For example, many 401(k) and IRA plans will allow you to arrange recurring contributions at regular intervals, ensuring you are responsibly saving for the future. You can also arrange recurring payments for loans so you never go into default.
Online recurring payment service – Oceanpayment
When you’re running a subscription-based business, customer retention should be one of your key priorities. Because it’s significantly cheaper to retain an existing customer than it is to acquire a new one, you should try to do everything in your power to boost customer retention. Optimizing your recurring payment process by making it as simple for the customer to make payment as possible can be an effective way to encourage your customers to stick around. Contact us to learn more about how to get recurring payments right!