More and more goods and services are provided on an ongoing, periodic basis. Therefore, recurring payments have become one of the most frequent payment models. B2C companies from a wide range of industries hopped on the bandwagon and offered movie streaming services, delivery services, insurance, phones, electricity, etc. In the B2B market, the subscription business model also gained relevance for a diverse range of hosting or leasing services from laptops and smartphones to IT infrastructures.
Automated billing scenarios have many advantages: they save time, improve customer satisfaction, and enable enterprises to increase their subscription revenues.
Recurring payments are often referred to as subscription payments, automatic payments, or recurring billing. So let’s look into some of the differences between these terms.
Recurring subscriptions are ongoing payments with an annual or monthly billing frequency for a product or service. While recurring payments mainly refer to credit cards, subscriptions can be realized with other payment methods. Additionally, the storage of data is not mandatory with subscriptions.
Recurring billing or invoicing, also known as subscription billing or invoicing, means an invoice is automatically sent to a customer on a predefined date. The customer settles the payment itself.
On the other side, recurring payment pre-charges the customer’s chosen payment method, e.g. credit card, bank account, Paypal, etc.
When a customer chooses a recurring payment service, the recurring billing process generally follows these steps:
- A customer chooses recurring payment from a list of payment methods and accepts the merchant’s terms and conditions.
- For the initial payment, the client enters their payment details which are saved in the payment gateway for the following transactions.
- The customer receives an invoice with all the details of the recurring payment. At the predetermined schedule further billings will be carried out.
- Acquiring bank, credit card scheme and issuing bank approve the transaction; the recurring payment is executed, and the funds transferred to the merchant account.
- The customer receives information before the next transaction and its status.
B2B SaaS solutions such as IXOPAY’s acquirer agnostic payment orchestration platform provide the ideal basis to integrate the entire billing process of merchants. Payment orchestration offers a wide range of options to map recurring payment processes. All customer payment details can be securely stored and tokenized directly on the platform. When the transaction occurs, the recurring payment software uses tokenization to enable a smooth, safe and customer-friendly settlement and automatic billing.
Furthermore, IXOPAY provides individual plans to adapt the platform to the specific needs of a merchant’s payment schedule and billing setup.
- Failed payments: expired cards, changes/new cards of existing customers or insufficient funds on a client account are the main challenges of recurring payments.
- Payment provider failure: failing or interrupted connections to the payment provider can cause loss of data as well as delays in transactions.
- Chargebacks: an efficient chargeback management saves time and money for customer’s and enterprises.
- Data Storage: safe and redundant data storage is mandatory to provide smooth transactions and a high customer satisfaction.
- Regulatory compliance: PCI DSS compliant software such as IXOPAY offers high security for enterprises of all sizes and industries.
- Fraud: Risk management tools enable flexible strategies to avoid fraud.
- International enterprises: global businesses operate in multiple currencies which are integrated in the enterprise billing setup.
- Multiple Payment Methods: regional payment preferences or regulations are to be considered as well when setting up recurring revenue services.
Offering a wide range of payment scenarios is attractive for customers and merchants alike. From the customer’s perspective recurring payments save time and money and therewith improve customer satisfaction.
For customers and merchants alike, recurring payment means a decrease in late or missed payments. It makes paying processes more predictable and safe. These advantages add to a smooth checkout experience on both sides and improves customer loyalty.
A solid payment infrastructure creates the basis for the entire invoicing process of a merchant, stores data securely and efficiently, and enables innovation and development.