recurring payment

Everything you need to know about Recurring Payments

If you are offering a product or a service for which you want to charge your customers on a repeated basis, recurring payments is something you should opt for. It is a convenient option that your customers do not have to remember to pay for your products or services. Using recurring payments allows you to sell your products and services automatically. Checkouts are optimized to make it easier to predict the cash flow.

What are Recurring Payments?

Recurring payments are the repeated payments, you are charged automatically for the products or services you are subscribed to and charged on a fixed interval. It can be for a specific period of time depending on the business model. The whole process is initiated by card authorization in the following steps:

  1. The recurring payment option is selected by the customer on your website.
  2. Now they need to accept terms and conditions for authorization.
  3. Once authorized they need to provide their card details and confirm the payment, now the customer will be charged on fixed intervals until they choose to cancel the subscription.

recurring payment

For Example, You have subscribed to a broadband connection on a monthly basis, you renew broadband service every month, instead of doing that you can choose recurring payments option on their website. Now the amount will be automatically deducted from your account every month and your subscription will be renewed automatically.

Related Post: Recurring Payment via UPI or Credit cards?

Advantages of Recurring Payments for Merchants:

  • Monitor Cash Flow: Merchant can monitor the average cash flow that is being credited into his account which can help him build a strategy for the future.
  • Fewer Missed Payment: As the payments from customers will be automated, the merchant does not have the hassle of sending payment reminders to his customers thus saving time and money.
  • Reduced Processing fees: As the recurring payments are done online, the extra cost required for a cheque payments will be avoided.
  • High Customer Retention: If the customer wants to stop the recurring payments they need to cancel the subscription which is most likely not going to happen.

 Related Post: What makes e-commerce payment secure?

Advantages of Recurring Payments for Customers:

  • Avoid Late Fees: Many businesses charge a penalty for late fees which can be avoided using recurring payments as the amount is automatically debited after a fixed interval without having to remember. They are most beneficial for those who travel a lot and do not have time for renewals.
  • User Convenience: Once the customer has opted for recurring payments, they do not need to log in again to make a payment, the payments will be done automatically after the fixed interval for the products or services.
  • Manageable Spending: If a customer wants to buy an expensive product and he doesn’t have enough balance in his bank account, he can split the amount into multiple billing cycles with recurring payments.
  • Quick Payments: Use of a cheque payment is time-consuming as it takes some days for the amount to reflect into merchant’s account at the same time you have to stand in the queue for making a cheque payment. Whereas recurring payments are online payments and the amount is reflected immediately into the merchant account at the same time automation is what makes recurring the more preferable option than a cheque payment.
  • Environmental Saving: Recurring payments are digital payments and are an alternative for paper-based payments like a cheque. Recurring payments have no paper billing, everything is digital in recurring payments thus saving the environment.

 

For a recurring payment, the subscription model works the best for large merchants with multiple products. Recurring payments are game-changers, you need to rethink as to what works the best for your customers.

Digital Payment Guru provides payment gateway integration service of top payment gateways like PayPal, Paytm, PayU, Instamojo & Atom at best market rates. If you are confused about which payment gateway to choose from, we can help you choose the best payment gateway for your business by analyzing your business requirements.

 

 

UPI or credit card?

Recurring Payment via UPI or Credit cards?

Does your business require a collection of online payments for products and services at a regular interval?
Payment gateway providers make it easier for customer with Credit card option. With UPI coming into a lead, it would be a great contender. Which one should you go for recurring payments? Let us find out.

What are Recurring Payments?

In a recurring payment model, the service providers deduct the purchase amount from the buyer’s account at regular interval which is set up automatically.
There are multiple recurring payment businesses, some use an invoice method wherein a payment is automatically deducted against an invoice and others use Subscription Model business wherein you only pay as you use the services or product.

Related Post: Everything you need to know about Payment Gateway.

How Recurring Payment Work?

To enable recurring payment, a customer must save the card and grant permission for the recurring charge. Stored payment data can then be used used to automatically process payments for repeat services or subscription model business. Payment gateway service providers can automate all types of business billing needs. Some have payments based on invoice cycle others initiate and manage recurring payments. Solutions are different for both types and thus it is necessary to identify your billing needs before getting a recurring service.

What is UPI?

Unified Payment Interface (UPI) is a single platform that provides different banking services and features. If your bank is UPI enabled, you can create a UPI ID that can be used for making transactions. A transaction can be made using Aadhaar number, Mobile Number, and Virtual Payment Address (UPI ID). UPI allows the user to transfer and receive money from one bank account to another by using a smartphone. It enables the transfer directly from a bank account to the merchant and also handles the basic banking activities. UPI is a revolution that can be an alternative for e-wallets, in other words, UPI is the best thing in the online money market.
According to NPCI, in March Rs.1.33 Lakh Crore of transactions is made via UPI which is 24% increase from February 2019.
In 2018, UPI launched its second advanced version UPI 2.0 with more features but NPCI did not add recurring payments support in it. This feature could be coming in UPI 3.0.
The feature can enable customers to issue a one time mandate recurring payments for services from the merchants. The best example can be automatic payments of monthly bills and subscription-based services. RBI refuses to release these features for UPI in fear of its misuse.

Related Post: What? How? Why? about UPI.

UPI vs Credit Card for recurring payments?

online payment

Business prefers to set up recurring payments against Credit/debit cards. Some global businesses like iTunes set it up on debit cards with One-factor-Authorization.

Unified Payment Interface:

  • Recurring payment support for UPI is coming soon.
  • A customer has full control over authorization for the requested payment.
  • In the case of refunds, the merchant and buyer communicate directly.
  • UPI is will be available with the banks that do not provide recurring payments.
  • A recurring payment can be availed by anyone that has UPI.

Credit Card:

  • Recurring payments are available in credit cards.
  • Money is debited Automatically without customer’s involvement.
  • In the case of refunds merchant also has to deal with customers bank.
  • Recurring payments can be availed by those having a Credit card.
  • A recurring payment cannot be availed with banks that do not allow it on a card.