Businesses worldwide have increasingly embraced the recurring payment model to collect payments from their customers. According to the Subscription Economy Index report published in 2021, the subscription economy has witnessed remarkable growth, surging by over 435% in the last nine years. Its popularity is driven by its ability to generate consistent revenue and provide convenience to customers.
Do you want to move towards a subscription or membership-based model for your business? This model is not only limited to movie streaming services and gym membership. Whether you are a law firm, an accounting firm, or a marketing agency, you can come up with creative subscription-based products for your clients.
Before you take that major decision, let's examine recurring payment processing first, how it works, and why you should think about using a recurring payment solution.
What Is Recurring Payment Processing?
Recurring payment is a payment method where the customer authorizes a business to bill them automatically at regular intervals. The money is collected directly from their bank account on pre-determined dates. Recurring payment processing includes collecting and managing these recurring payments effectively and securely.
In this era of technology and automation, many businesses use recurring payment solutions to manage subscriptions. Cone's proposal-to-payment system and other such tools make it easy to collect automatic payments through a variety of payment options with little manual effort. Let's take a closer look at how regular payments are handled before delving into the benefits of recurring payment solutions.
How Are Recurring Payments Processed?
From the customer's perspective, signing up for recurring payments is pretty straightforward. They have to go through a few terms and conditions and enter their payment details to authorize the business to collect payments automatically. Later, the payments are automatically debited from their bank account and they keep enjoying the service. However, a lot goes on behind the scenes. Here's what a typical recurring payments processing workflow looks like.
- The payment details entered by the customer are securely saved to process automatic payments in the future.
- A sales invoice is generated and sent to the customer as per the pre-determined schedule.
- On the pre-determined date, say every month, the payment gateway sends a payment request to the payment processor and the processor forwards it to payment service providers or card associations.
- The association accepts the requests before sending them to the customer's bank.
- The bank approves the transaction after checking the payment details and funds in the bank account.
- The amount is debited from the customer's account and credited to the merchant account of the business first. Later, it is transferred to their bank account.
A recurring payment solution like Cone's proposal-to-payment can help you complete this process seamlessly with minimal time and effort required.
Benefits of a Recurring Payment Solution
A recurring payment solution can help you with multiple aspects of accepting recurring payments from your customers.
Collecting Payments Through Multiple Payment Methods
Customers prefer the payment method of their choice. With the help of a recurring payment solution, you can offer multiple payment method options to your customers. Cone's proposal-to-payment solution, for instance, supports direct debit, payment gateway, and standing orders.
Setting Up Standing Orders
A standing order is an instruction given to a bank by a customer to make regular fixed payments to your business. Recurring payment solutions allow you to set up standing orders with your customers so that you can receive money regularly from your customers.
Accepting International Payments
Expand your business beyond geographical limits by serving customers who live in different countries. Recurring payment solutions also allow businesses to accept international payments through direct account-to-account transfers. Cone's proposal-to-payment solution allows you to accept international payments seamlessly without any high rates or hidden fees.
Integrating with Payment Gateways
Choose a recurring payment solution that offers integration with popular payment gateways like Stripe, along with banks. This allows smooth and efficient payment processing so that both you and the customer can have a seamless experience.
3 Key Benefits of Using a Recurring Payments Solution
1. Minimized Efforts
After automating the management of recurring payments, the time required for invoicing and payment processing is reduced dramatically. Your intervention will be required only when changes need to be made to the payment type or amount charged.
2. Cost Savings
A recurring payment solution can help in reducing administrative costs by automating the entire process of recurring payments. It also frees up the time of your team members which they can devote to other crucial areas of the business. Recurring payments can help you save money on transaction fees because they typically have lower or zero transaction fees compared to other payment methods.
3. Improved Customer Satisfaction
Recurring payment solutions allow you to provide a better overall experience to your customers. As the process is automated, the risk of manual errors and resulting customer disputes is naturally reduced. This leads to improved customer satisfaction and more sales.
In today’s world, the recurring revenue model is driving the growth of many businesses including professional practices like law firms, accounting firms, freelancers, and marketing agencies. Embrace the recurring payments model and automate the payment collection process with the right recurring payment solution.
Cone's proposal-to-payment solution is more than just a recurring payment solution. We have designed an all-in-one platform that takes care of creating proposals, generating invoices for signed proposals, and collecting payments as well. It helps you get paid by providing you with all the necessary tools to process payments quickly and seamlessly. Cone's proposal-to-payment tool is completely free. So what are you waiting for? Sign up for Cone today!