Is Recurring Billing Right for Your Business?

shutterstock_143469955Recurring billing has become a popular way for consumers to pay bills, benefiting both the merchant and its customers. With recurring billing, a payment method is charged automatically at an interval determined by the business. The customer agrees to have his card or bank account charged on a specific date on a recurring basis. Often customers are charged once per month or once per year, depending on the service.

While recurring billing tends to foster loyalty and eliminate late payments, it is a better option for some businesses than others. Before you make the switch, here are a few things to consider to determine if recurring billing is the right choice for you.

Is Your Model Subscription-Based?

The top criteria for recurring billing is that your service is subscription based. This is especially true if your subscription model generates a monthly payment, rather than one that is only once each year. If customers register with a credit card, cards can easily expire from one year to the next, leaving you to constantly have to track whether your customers have updated their information.

If any part of your business charges customers on a monthly basis, you should work hard to encourage customers to make the switch. Not only does recurring billing save you time in account management each month, you’ll eliminate the need to send paper bills, eliminate the need to deal with awkward late payment issues, and give your business the monthly cash flow you need to remain solvent.

Does Your Processing Service Offer Recurring Billing?

One of the biggest obstacles for merchants today is finding recurring billing services. Not all payment processors offer this service, so businesses are limited in the processing providers they can utilize. Flagship Merchant Services offers recurring billing as a reseller for Authorize.net. With an approval rating of 98 percent, Flagship Merchant Services can help connect merchants to the recurring billing plan that is best for them.

Flagship and other recurring billing providers give businesses the ability to customize their recurring billing setup to meet the needs of their unique customer bases. When a customer has problems, he’ll usually be given a direct customer service number to call, where he’ll have quick, friendly customer service for ironing out any problems with subscription payments.

Are Late Payments a Problem?

You’ve worked hard to grow a customer base, so late payments can put you in an awkward position. This is especially true if you’re required to contact the customer directly about the late payment. It could result in the loss of a customer who feels you’ve developed a friendship, especially if that customer didn’t mean to miss a payment.

Recurring billing eliminates the personal approach, moving the payment relationship to your processing service. Payments are automatically charged each month, leaving no room for error. If a payment method changes or is expired, an automated email can be sent to the customer as a reminder to update payment information to continue service. If the customer chooses to ignore that email, the service is canceled without the customer receiving your service for free.

Do You Want Quick Access to Your Funds?

With recurring billing, funds go directly to your account on the designated date, leaving no need to send a bill and wait for payment. This can be even more beneficial in keeping your business “in the black,” since payments will be consistently rolling in. The payment processing service takes care of all of the details, including keeping customer payment information updated. In the event a customer’s payment method expires or changes, the payment processor will take care of those details, as well.

Because payments are set up to come in every month, a business can also more accurately predict the money that will be coming in each month. For this reason, many businesses are choosing a subscription-based business model over a purchase-based one. Businesses offering subscription boxes, where a box of goodies arrive each month for a fee, have been taking off in recent years, especially in the beauty and fashion fields.

Do You Plan to Grow to a Huge Customer Base?

Any business with optimism has dreams of someday outgrowing its credit card processing service. It’s important, for that reason, to find a service that will grow with your company. Recurring billing sets you up to accept a large number of people, with the process automated in a way that is efficient and error-free. Big-batch processing is especially designed for merchants who specialize in card-not-present transactions, where a large amount of credit card information must be processed at once.

North American Bancard’s Big Batch Merchant Services focuses on merchants with recurring payments, offering the ability to process up to 250,000 transactions per file and multiple files each day. If a merchant requires the extra security that address verification provides, Big Batch Merchant Services can handle that, as well, working to ensure a customer’s credit card matches the billing address registered with his credit card issuer.

Could Your Business Benefit from Storing Customer Data?

In addition to recurring billing, many recurring billing providers will also offer customers the option of storing their information for future purchases. This is optional, giving your customers the choice to keep card information private if they prefer. But for customers who choose this option, it can be a convenient way to shop on your site. Your business may also notice sales go up when customers have the ability to purchase something with just a couple of clicks.

It’s important that you partner with a respected, leading payment processor for this service, since you’ll want to be sure your customer data remains secure at all times. Payment Depot’s enterprise-level plan offers both recurring billing and card information storage services to merchants, along with a variety of other amenities. With its real-time online reporting feature, you’ll be able to see right away just how customers are interacting with your service.

While recurring billing might not be the best option for your business, it’s a great way to ensure you get paid on time by each customer every month. For businesses that are still purchase-based, this may be a good reason to consider offering a subscription option as part of your offerings.

Posted on Thursday, September 11th, 2014