Payment solutions that support recurring payments are critical for businesses to enable consistent collections that deliver more predictable cash flow. For customers, the predictability ensures better cash management by providing an easier way to pay for ongoing purchases or services.
While the details of how recurring payments work has been explored in earlier blog posts, the basic premise is that they authorize a business to bill a specific customer account at regular times (such as monthly or quarterly). The recurring payment can be fixed, or can vary, and can continue indefinitely.
There are various methods that can be utilized to enable recurring payment solutions that enable recurring payments. Whether a consumer chooses credit, debit or ACH payments for recurring payments is a matter of preference, but they are all choices that every business should offer to their customers. While the choice for the customer depends on preference and the goods/services that they are paying for, both businesses and customers get a major boost in convenience.
For consumers, recurring payments feed into their desire to pay bills with a debit or credit card, eliminating the hassle of writing a check, buying stamps and finding a mailbox. Customers can be sure their bill is paid automatically, on time, with no late fees.
Businesses must understand the credit and debit card processing differences in order to deploy solutions that benefit the business and the consumer. For example, when it comes to fees, credit cards may bring higher fees than debit, ACH or eCheck payment solutions.
Consequently, businesses may want to create marketing plans that incentivize the choices of debt card and ACH payments in order to reap those fee saving benefits. Of course, there is an alternative such as passing the fees along to the consumer, but businesses must weigh the potential benefits of the cost savings with the very real possibility of losing customer loyalty.
Ultimately, businesses that provide payment solutions that enable recurring payments will see a wealth of benefits from offering choices to their customers. The convenience brings major benefits in terms of cost savings for the business and simplicity for the consumer.
To learn how BillingTree’s payment solutions can help streamline your company’s billing practices and boost revenue cycles, contact us today.