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Recurring Billing: Helping Merchants Increase Cash Flow and Reduce Costs

March 19 2014 | By Pam Mukiama

What is Recurring Billing?

Recurring billing refers to an arrangement between a merchant and a customer, where the customer authorizes the merchant to automatically charge their credit card for a recurring service or product. The payment is processed at specific intervals agreed upon by both the merchant and the customer. The merchant's ability to process the credit card payments at these pre-determined intervals depends upon the services provided by his credit card processing company. For the customer, the card brands facilitate the process by making it possible for issuing banks to identify recurring transactions within the authorization and settlement processes.

How does Recurring Billing benefit my customers?

Ensuring timely payment is one of the many benefits that recurring billing affords cardholders. It eliminates the need for calendar reminders and the possibility of interrupted services for non-payment. Also, there are usually late fees associated with payments received after the due date and setting up recurring billing eliminates this completely. Simplify the payment experience for your customers and ensure no one suffers from a late payment again! Your customers will also be happy to save on paper checks, postage stamps and the time spent mailing payments.

How does Recurring billing benefit my business?

If your business relies on recurring revenue streams such as monthly subscriptions, service fees, membership fees etc. then you should definitely ask your payment processor about setting up recurring billing. The truth of the matter is that recurring billing increases your cash flow and gives you peace of mind so you can focus on other areas of growth for your business.

Another major benefit for merchants is the customer loyalty garnered. By making it so convenient for your customers to pay, they appreciate the customer service and reward it with their loyalty to your brand. As a merchant you also improve efficiency by eliminating the need for cash and check handling, not to mention the time you save which would otherwise be spent creating and mailing invoices.

How do I introduce recurring billing to my customers?

As a merchant, one of the best times to set up recurring billing is every time you land a new client. If for example you sell insurance policies, getting your customer to sign up for recurring billing at the same time that they are signing their contract makes perfect sense. They are already filling out paperwork so adding one simple step to the process is no hassle.

Another great time to introduce recurring billing is whenever there is a missed payment or delay in payment from one of your customers. This presents an opportune moment to initiate the recurring billing conversation. Simply explain to them the benefits mentioned above and they will certainly see the logic in signing up!

For more questions on recurring billing please contact us.

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