What is a Recurring Payment System?
The recurring payment system is a model for collecting funds from customers’ accounts regularly for the services or subscriptions delivered to them. A recurring payment is nothing but an amount the merchant charges a customer automatically every month. The payment frequency could be monthly, quarterly or yearly, which depends on the customer’s billing cycle.
Further, a recurring charge could vary depending on the nature of your subscription and its usage or consumption. The amount could be a fixed or a variable, for example, any ongoing membership, monthly subscription, mobile phone bills, electricity bills, utility bills, etc.
How does it work?
As part of the recurring payment process, the merchant provides an ability/option where a customer can either make a one-time payment or provide payment details to be tokenized and stored.
In this, the merchant obtains consent from customers before tokenizing the payment instrument (card) and storing it for future use – it further facilitates automatic payments at regular intervals, avoids entering card details repeatedly for security reasons, and finally provides a faster payment experience.
After that, the merchant uses the saved token for debiting their accounts regularly on or before the invoice due date as per the customer’s billing cycle (monthly, quarterly or yearly) and the business’s terms and conditions.
Let’s understand further how the recurring payment is associated with recurring billing. The recurring billing generates invoices periodically against the services for each customer and sends them to their emails. Next, the customer will either pay the bills on or before the due date, or the merchant will pull payment through an automated process.
Suppose a customer is ready to provide payment information (with consent to debit the Account) to the company; then, it becomes the company’s responsibility to deduct the funds from the given Account (saved token) on the due date every month – this is the time when businesses need a recurring payment solution to carry out such tasks.
Automatic Payment Processing (Collections Process)
An automated payment collection is the primary step of EarnBill’s Collection Process, which eliminates manual intervention and allows businesses to collect payments automatically in an efficient and hassle-free manner.
An automated process runs per defined frequency in the system, checks the due date of an invoice and pulls the payment from the customer’s Account. Not only that, it also reconciles the payments and automatically marks the invoices as paid. The system also sends an automated payment notification via email on successful or failed payment transactions. The businesses can use the retry mechanism if the payment fails and re-attempt the auto-debit using the same payment instruments.
The EarnBill provides flexibility in making payments via various payment methods or options like Credit Cards, Debit cards, Bank transfers, and UPI (In India) through different payment gateway integrations such as Stripe, BrainTree, and PhonePe. By automating the recurring payment process, companies can save administrative time, reduce errors, and improve customer satisfaction. As a result, it improves cash flow and accelerates revenue collection.
What does Recurring Billing mean?
Recurring billing is a system where a merchant or business owner charges customers periodically for regular services or subscriptions, as I described above. The recurring billing with payment process maintains an ongoing relationship and builds a complete billing and revenue management ecosystem. For example, in a subscription-based business model, a merchant wants a solution to keep track of their subscriptions and generate monthly invoices for their customers.
The EarnBill Recurring Billing Platform provides comprehensive features and capabilities with a lot of flexibility in custom functionality based on your business requirements. You can find more details here.
Considering all the requirements of recurring payments with recurring billing, the EarnBill SE & EE offerings are the best solution at an affordable price to help businesses send automated invoices and collect payments seamlessly.