Which businesses can benefit from recurring payments? The list is probably longer than you think. Recurring payments allow a merchant to automatically charge customers for regular services or consumables, eliminating friction – and minimizing the time the back-office spends on invoicing and collections. Verticals and niches, such as video streaming services, publications and software companies, have made recurring payments a key part of their business strategy. Now more businesses are discovering the benefits.
The Pandemic Changed Everything
The COVID-19 pandemic drove changes both in consumer behaviors and preferences and also in the services and customer experiences that businesses offered:
- Touchless, socially distanced ways to pay
At the height of the pandemic, people didn’t want to – or in some cases, could not – make in-person payments, handle cash, or used PIN pads that other consumers had used.
Recurring payments enabled consumers to arrange for automatic payments using their credit or debit cards or drawing on funds from their bank accounts.
With people confined to their homes, subscription services saw increases. According to Nielsen, streaming platforms saw double the usage at the end of March 2020 than at the same period in 2019. The pandemic also accelerated other trends, such as coffee subscriptions. Innovative merchants also found different ways to keep revenues flowing by offering “monthly boxes” of curated items, helping customers stay stocked with quality items when brick-and-mortar shopping wasn’t an option.
Recurring payments allowed consumers to pay for these services and subscriptions automatically each month.
- No-contact payment for regular services
Companies that provide services regularly, such as landscapers, snow removal companies, and cleaning services, may have traditionally accepted payments at the time of service or sent invoices.
Recurring payments give customers a convenient way to pay without requiring in-person interactions. They also offer an easy and convenient way for non-profits to accept regular donations.
Advantages of Recurring Payments
While recurring payments helped some organizations keep revenues coming in during the pandemic, their value doesn’t end there. Any business that now sends out regular invoices can save time and effort by replacing those processes with recurring payments. Moreover, automatically drawing on the customer’s account also means the business will spend less time dealing with past-due invoices. Merchants will also be better able to forecast demand, manage inventory, and see more even cash flow.
Merchants also tend to see higher customer retention when payments occur automatically – when payments are in the background, they’re easier, and businesses can build stronger ties with their customers than when payment processes are difficult and frustrating for consumers.
Recurring payments are also secure. Fewer people at the merchant’s organization will ever see customers’ account or card information. Additionally, because recurring payments use a token in the merchant’s system rather than storing actual payment card data, if a hacker gains entry, they won’t find any monetizable data to steal.
There are also additional features of recurring payment solutions that add value. For example, merchants have the flexibility to set up payments at any interval their customers agree to – weekly, monthly, quarterly, etc. Also, by using Card Updater, the information on file is always current, even if a bank issues the customer a new card, minimizing the number of declined transactions.
Benefit to Consumers
Businesses across the board have learned that providing optimal experiences is key to coming out on top in the competition for customers. Recurring payments provide consumers with experiences that are easy and convenient. Payments automatically occur in the background as consumers receive products and services – no extra effort is required. Moreover, the business’ team can focus more attention on customers and less on payments.
The Good News for Software Developers
Tools are available that make it easy to integrate recurring payment solutions with the software you provide to your customers. Software development kits (SDKs) that install alongside your solution minimize development time. Working with the right partners also solves the problem of PCI compliance – your partner ensures secure, compliant payment processes so you and your users don’t have to. The tools your partner provides can also streamline the merchant onboarding process, saving time for your team or your channel partners.
Any business that provides goods or services regularly can benefit from recurring payments. Add value to the solutions you provide by giving them this option.