Setting Up Recurring Payments-How To Integrate Them And Generate More Revenue

In today's modern payment ecosystem, more and more customers are understanding the innumerable benefits of paying to access a product or service instead of owning it outright. This is one of the biggest reasons why the subscription and recurring revenue models are taking over the once-preferred one-time sales models. If you're new to the world of recurring payments and white-label payment gateway solutions, this article will help you gain invaluable insights into how your business can efficiently integrate the model of recurring payments to generate more revenue over time.

What is the Recurring Payment Model?

Recurring payments, also known as auto-pay or subscription payments, refer to payments that get automatically charged to the bank account or credit card of a customer on a scheduled, prearranged basis. They are commonly used for gym and other memberships, utility bills, and subscription services such as Netflix, among other things.

Typically, recurring payments occur weekly, monthly, quarterly, or yearly. For businesses, recurring payments offer predictable revenue and help reduce administrative costs. For customers, they emerge as a convenient way to pay for products or services and reduce service disruptions because of missed payments.

Let us read more about the benefits of recurring payments for businesses.

Recurring payments tend to bring a high level of predictability to the revenue streams of a business. They help businesses count on a steady stream of income at regular intervals instead of being unsure about when and if customers will make one-off payments. This creates a sense of predictability which, in turn, aids financial planning and makes budgeting more accurate and reliable. This further helps businesses invest better in infrastructure and plan for future growth.

In addition to these advantages, recurring payments improve cash flow significantly by offering a steady stream of revenue. This regular cash inflow helps businesses easily manage expenses, pay their utility bills on time, maintain financial stability, and invest in growth. Furthermore, the implementation of a recurring payment system helps in bringing significant cost efficiencies. It helps minimize the administrative burden and cost associated with manual billing and collection by automating otherwise complicated billing processes, saving precious time and other resources.

Recurring payments also enhance customer retention as the ease and convenience of the payment process associated with recurring payments allow customers to keep using the products or services. This, in turn, results in a higher customer retention rate, which is important for business growth. Also, recurring payments make it easier for businesses to cross-sell or upsell other products or services, resulting in improved customer loyalty and revenue. Moreover, recurring payments are helpful to simplify the accounting processes thus saving time and reducing errors while making it easier to track financial performance.

How to set up recurring payments to generate more revenue?

The first step is all about gaining a clear and complete understanding of your business's specific needs and model. Does the recurring billing solution support one-time, usage-based, and/or recurring charges within a single plan? Do you need to archive product pricing plans? Does your business enjoy the flexibility of manually managing one-off anomalies in payments? Have the access control and security concerns taken care of? Would you be expected to send promotional emails? Ideally, the right recurring billing solution should be characterized by robust integrations with accounting software to facilitate easy global tax support and prevent any reconciliation mess.

You will come across different pricing models to choose from when it comes to recurring payments: tiered, flat-rate, freemium, and usage-based, among others. You should carefully assess your business requirements and choose a pricing model that corresponds with your customer base, products or services, and overall business strategy. For this, you can count on a trusted provider of white-label payment gateway solutions that offer a reliable, secure payment gateway that is compliant with stringent PCI DSS regulations and all other applicable laws and regulations.

The white-label payment gateway solutions should include features such as dunning management, automated payment retries, and out-of-the-box integrations with your existing business systems. It will also be the time for you to create your checklist in the context of the support portal, security protocols, API, PCI DSS compliance, invoicing, checkout, integration, etc.

Once you have finalized the provider of white-label payment gateway solutions to accept recurring payments, the next step is to set up a recurring payment system. For this, you will have to define the payment frequencies (weekly, monthly, quarterly, or annually). You will also have to define the price based on the selected pricing model and then proceed to customer segmentation based on their subscription tier or usage.

For a smoother and frictionless customer experience, it is important to offer multiple payment options, including bank transfers, digital wallets, debit cards, credit cards, etc. This will significantly increase the chances of customers choosing your service and sticking with it. Furthermore, you need to obtain the explicit consent of customers before you can start charging them regularly. To get this done, you need to have a defined system in place that can securely capture and store this authorization. It is equally important for your business to be completely fair and transparent with your customers about the terms and conditions of recurring payments, cancelation policy, refund policy, and billing cycles.

You should also put a reliable system in place for automated payment retries, possibly suspending services until payment is successful, and sending email notifications to customers. Lastly, you should offer impeccable and 24/7/365 customer support to experience the innumerable benefits of recurring payment and white-label payment gateway solutions such as improved cash flow, higher customer retention, and more predictable revenue.

Find out how your business can make the most out of recurring payments with out-of-the-box white-label payment gateway solutions from ITIO Innovex. Powered with SSL encryption and fraud and risk management tools, our white-label payment gateway solutions help optimize payment operations and increase customer loyalty like never before while helping your business with the quickest and smoothest onboarding.