According to a recent survey by Mastercard, nearly two-thirds of consumers have adopted a new payment method in the past year and a half. The Covid-19 pandemic has contributed to a shift toward digital banking, with consumers increasingly opting for alternatives to traditional payment methods such as cash or checks.
Businesses are also innovating their payment methods, including the use of contactless payments and eco-friendly payment cards, in order to meet the evolving needs and preferences of consumers. As the demand for more convenient payment methods continues to grow, consumer payment habits are likely to continue to change and adapt.
One way for businesses to address this challenge is by implementing a recurring payment solution. This solution provides ease for business owners in managing customers' payments, hence allowing them to focus on building relationships with customers and prioritizing their needs. It is particularly useful for businesses that sell products or services that are frequently purchased due to necessity or loyalty. By using this payment model, business owners can streamline the payment process and free up time to focus on other aspects of their business.
What are recurring payments?
Recurring payments, also known as automatic payments or recurring billing, refer to payment methods that allow customers to pay on a predetermined schedule, such as daily, weekly, monthly, or annually. These payments can be customized to fit the needs of the business.
According to the product, there are two types of recurring payments, namely:
Fixed: the customer pays the same amount each time they make a payment. Example: The cost of a movie streaming platform subscription.
Variable: Determined by the individual's usage of the services provided during the payment cycle. Example: water and electricity bills.
Potential customers choose recurring payment modes or subscription products on the provider's platform.
Users create an account as a form of product subscription commitment.
After that, the system redirects the user to the checkout page for payment verification (where the customer enters their payment information details, such as bank account number, authentication, and others). The payment information is then fully encrypted and saved on the payment gateway page.
If the automated verification is successful, the user becomes an official customer of your product and can begin paying with recurring payments on the agreed-upon schedule. The payment cycle will be updated regularly. For example, a payment is valid monthly until the customer cancels it.
Why are recurring payments important for your business?
Recurring payments can help your business to increase cash flow. Furthermore, this payment model can be an appealing promotional strategy. Many streaming service providers have implemented this strategy (Netflix, YouTube Premium, Disney Hotstar). They entice potential customers by providing free product trials. To try the product, the user must register as a customer and input their credit card or debit card numbers. This way, customers can make automatic monthly payments without having to input their financial information repeatedly.
Implementing this payment processing model is also cost-effective, particularly in terms of operational logistics, because you can predict future income. You can even reduce the costs of processing payments and creating invoices. Just set up a payment plan once and let the software handle the rest.
How do you enable recurring payments management?
Through the Recurring Payments Management solution from Ayoconnect, you can automatically manage subscription payments for banks and e-commerce. Ayoconnect also provides recurring payments management for 24+ brands and categories, including utility bills (water and electricity), insurance premiums, and internet and cable TV subscriptions. Ayoconnect also provides an analytics dashboard that allows you to learn more about your popular products' growth, transactions, and data, as a basis for making accurate decisions.
By implementing automated methods, businesses can reduce risks such as late or missed payments, allowing their income to remain stable. Furthermore, recurring payments are safe. Payment gateways that process these recurring payments must secure their servers using cutting-edge methods like tokenization and adhere to the prevailing regulations. Ayoconnect recurring payments management solution is certified by PCI DSS (Payment Card Industry Data Security Standards) and licensed by the Bank of Indonesia.
In the twenty-first century, companies prioritize customer experience as a key factor in their success. Customers want not only high-quality products and services, but also seamless and enjoyable shopping experiences. Implementing a recurring payments management solution improves customers’ experience to be hassle-free when making transactions. Therefore, it is important for companies to also effectively communicate this payment method to their customers.
Customers can take advantage of the convenience of automatic payments, where preset subscription fees for business services are automatically deducted. They don't have to worry about payments, so they can focus on the experience and value of your products or services.