Recurring payment what are platforms

[ishanijerin1]

The recurring payment is one that must be made periodically and can be monthly, semi-annually, annually, among others. Many companies offer this modality, attracting new customers.

The use of recurrent payment (if seen from the perspective of a company, recurrent billing) has grown a lot in recent years as a result of new models for acquiring services available to consumers.

This is a form of payment used for services that are billed periodically , whether monthly, semi-annually, annually or at other times. Charges are carried out according to the pre-established period between the seller and the consumer.

In this article you will discover what is a recurring phone database payment model, which are its advantages and tips for improving billing in your company.

Do I pay the automatic debit on a recurring basis?
Oftentimes, recurrent payment is confused with automatic debit. Ultimately, this is a service with direct payment on the current account for services that can be monthly , such as mobile phone bills or credit cards.

However, despite their similarity, the two concepts are different . While automatic debit is only carried out with the customer's authorization, the recurrent payment is linked to a subscription .

To explain it better: the bill for a credit card, even if it has a different amount each month, can be paid automatically, with a bill charge. The customer uses the service and pays for it, without needing to subscribe to a plan.

However, a subscription to a streaming service or a university registration are considered recurring payments, as long as the customer subscribes to a regular payment plan, in which case they must first pay to enjoy the service.

What is the difference between the recurring payment and the installment purchase?
When purchasing on a regular basis, the customer pays the same amount each month for a period of time to settle the purchase. Can we call this a recurring payment? The answer is no.

Although they may also appear to be similar, installment purchases occur when the customer decides to divide the value of a product or service into several payments . This is a common feature between online and physical stores, with different payment options by installments.

For example: buy a piece of furniture worth 2 thousand dollars and divide it into 10 payments of 200 dollars.

The recurring payment refers to a service that will be used without a specific period , such as a medical plan or a monthly subscription to the gym.

Just like in the case of automatic debit, installment purchases are available for a product or service that has been purchased and will later be paid for by the consumer.

What services include the recurring payment option?
Recurrent payment is a trend that has been consolidating among brands and their consumers.

Certainly, more and more business models should be adopted. However, for now, these are the main areas that work with the recurring payment :

Streaming platforms
The boom in streaming platforms , such as the giants Netflix and Spotify, has boosted recurring payments across the world.

In this model, the customer pays a monthly fee to access a catalog of exclusive content, which could be films, series, music, etc. Today, you can find streaming courses included!

The system is always similar: first the customer signs up, enter payment details and then you can start using it.

Personal services
Recurrent payments are not only for technology and digital platforms. Traditional personal services such as schools, clinics and even parks also function in this sense.

In a club, for example, the customer must sign up to a plan, be there for the day with their payments and be able to enjoy the leisure and sports facilities.

Subscriptions through clubs
Changes in consumer habits require brand innovation. In the literature market, for example, the decline in sales of physical books has boosted subscription clubs . In addition to the book, the subscriber receives a special gift and reading guides.

Other markets followed this trend, such as beverages, makeup and even household products. In all cases, the customer makes a recurring payment to receive the products.

SaaS
Before we said that streaming popularized the recurring payment, but it wasn't the first time to use this billing model. The recurring payment included another name: recurring economy.

The greatest pioneers were software as a service (SaaS) companies, which offer technological systems as a service to other companies . Therefore, companies could start using the platforms without needing to acquire expensive permanent software licenses.

Take advantage of the opportunity to learn more about SaaS and its advantages.

Why adopt the recurrent payment?
Offering a service with recurring payment is a way to build customer loyalty and ensure the circulation of capital within the company .

This payment model is beneficial for all parties involved in the process. Buyers can guarantee discounts on the service, normally on additional credit card fees, since the idea is that they don't have to make the payment.

For companies/sellers, this type of charge reduces the tax risk, improves the relationship with the customer and enhances the financial management of the business.

It is also worth highlighting the growth of the market of recurring companies . In 2020 in the United States alone, the increase was 12%, including a 10% drop in the largest companies in the country.

Recurring payment in numbers
That the recurrent payment will increase is beyond doubt. But it is always worth presenting data that confirms the growth of this transaction model.

Consumers were changing their habits and these transformations intensified during the pandemic, which forced companies to adapt, in addition to bringing more growth to them.

Business examples with recurring payment
Listing examples of companies that have invested in the recurring and growing payment system is a way to make this concept clearer.

Netflix is ​​one of the most successful cases. The client contracts a monthly bonus service with a fixed invoice on the same day of the month. If you sign up on April 23, for example, the position will be held in all subsequent months on this same day.

Prime, Spotify, HBO Max and other streaming services work in a similar way. However, the recurrent payment is not exclusive to these modalities .

Any business that sells its services through monthly fees carries out recurring invoicing. This is the case of Internet plans, telephone and television services, universities, gyms, marketing agencies with monthly fees and much more!

What is a recurring payment platform?
For this billing model to work, it is ideal for the company to use a recurring payment platform. This system guarantees that the company manages payments and contracts with customers .

There are two types of platforms: those that focus on the customer realizing their payment and those that focus on financial management and the tracking of charges.

The charge can be done in three ways:

Credit card
The credit card reduces the volume of payments, optimizes transaction times and increases customer loyalty, in addition to being a payment method with a payment guarantee.

The so-called "plastic money" is one of the main payment methods . Therefore, it is essential to offer this option for recurring service payments.

Payment ticket
The payment ticket can be sent automatically by email or WhatsApp, as well as via chats on different social networks. It is a safe and practical way used by service providers from different areas.

The customer can also send the second copy without bureaucracy and even receive reminder notifications through different communication platforms.

How does the recurring payment platform work?
The recurring payment platform has two operating modes, according to the company's business objectives: integrated or not integrated on the website .

Recurring payment integrated on the website
This model is ideal for companies that want to offer checkout within their own website . Then, the customer purchases the product or service and enters the payment details on the brand's sales page.

The API ( Application Programming Interface ) "enables" the operation between the client, the company and the financial institution responsible for the financial transaction.

Platform not integrated into the website
Companies that do not sell on their website can also benefit from the benefits of recurring payments thanks to the non-integrated version.

Companies that sell medical plans or marketing solutions can have an invoicing solution available through a platform that communicates with financial entities .

Why should companies adopt it?
A good recurring payments platform optimizes the flow of charges . This way, the company takes less time to receive it, as the customer is notified of the payment deadlines and can opt for a credit card.

The entire process is safer for both parties, with failure mitigation, a high level of confidence in the execution of automatic tasks and greater operational efficiency day to day.