Solutions that make the lives of your employees and customers easier are the best — who wouldn't want to increase productivity and delight more customers at the same time?
An example of one of these solutions is recurring payments. In this article, we'll cover the definition of recurring payments, how they work, and which tools exist to help you manage and accept them.
With recurring payments, a customer provides their billing information once, and then you charge them based on a cadence that you both agreed to.
How do recurring payments work?
Recurring payments (sometimes called automatic payments) happen when a business gets authorization from a customer to automatically bill them and take money from their account on a pre-determined schedule (often monthly) to pay for a product or service the customer has decided to use.
Recurring and subscription payments are terms that are often used interchangeably — that's because recurring payments are how you manage subscriptions.
Subscription payments are when someone subscribes to your product or service and is then billed at a regular cadence.
Benefits of Recurring Payments
Recurring payments can be helpful for your business and your customers. They...
Save time for customers so they don't have to manually log into a system and enter credit card or bank account details — or write a check — in order to make a payment.
Ensure your business is getting paid on time and customers aren't having to set payment reminders.
Help your business predict cash flow.
Allow you to retain more customers.
Keep a single record of all payments a customer has completed and/or owes.
What types of businesses can benefit from recurring payments?
Any business that offers a product or service that requires a subscription can benefit from recurring payments. For example, businesses that sell services and/or non-tangible goods such as software or a gym membership. The same goes for businesses like Eversource that charge for utility usage.
An example of a business that sells a tangible product and could benefit from recurring payments is a meal prep delivery service like HelloFresh.
Recurring Payment Processing
You might be wondering how recurring payment processing works. Let's take a look at how you can process recurring payments next.
Accept Recurring Payments
To accept and process recurring payments, start by selecting a recurring payment software.
Then, provide your customer with the ability to select a payment plan and schedule, as well as their preferred payment method (platform like PayPal, credit card, bank account). Your tool of choice will safely store your customer's billing and payment details.
Then, once it's time for payment, the tool will automatically bill the customer and issue them an invoice.
Best Recurring Payment Processing
HubSpot Payments for businesses that sell services looking to manage subscription memberships.
Chargebee for offering multiple payment methods in various currencies and automatically rectifying any recurring payment failures.
Wave for setting up manual and automatic recurring payments at a small business.
Recurly for global, recurring revenue companies.
Square for businesses that already use Square Invoices or want to send free invoices and set up annually, monthly, weekly, or daily recurring payments.
Here are a few of the best recurring payment processing tools.
Best recurring payments tool for: Businesses that sell services and want to manage subscription memberships as well as integrate payments with their CRM.
Price: With HubSpot payments, there are no setup fees, monthly fees, minimums, or hidden charges. HubSpot charges a percentage of each transaction, so you only pay for the service when you use it.
2.9% of the transaction amount for credit and debit cards
0.5% of the transaction amount for ACH payments, which is capped at $5 per transaction. To celebrate the launch of payments, HubSpot is waiving ACH fees on the first $50,000 that you process each month, from now until March 31.
Key features and benefits: HubSpot Payments is ideal for businesses that sell services (such as agencies or financial institutions) rather than tangible objects and need to manage subscription memberships.
With Payments, you can send a quote to a customer with a recurring payment link and they can then transact in that exact moment.
HubSpot also provides a seamless customer experience by integrating with your CRM — meaning you can offer personalized buying experiences and streamlined payment all with connected data.
For example, you can take one look at a customer profile and determine that they're up for renewal. Then, you can easily get Marketing involved so they can quickly nurture the customer wherever they are in their journey in a personalized.
Best recurring payments tool for: Offering multiple payment methods in various currencies and automatically rectifying any recurring payment failures.
Price: You can get started for free and/or schedule a demo.
Key features and benefits: Chargebee is a subscription billing and revenue management platform that helps you implement and manage a recurring revenue model.
It allows you to set up a payment card industry (PCI)-compliant payment experience for your customers as well as offer your customers over 23 different payment gateways.
If you have an international customer base, Chargebee gives you the ability to offer pricing and recurring billing in over 100 currencies and payment methods. There's also a payment dunning feature to help you collect recurring payments even after one-time failures.
Best recurring payments tool for: Setting up manual and automatic recurring payments at a small business.
Price: 2.9% + 30¢ per transaction for Visa, Mastercard, Discover; 3.4% + 30¢ per transaction for American Express; Bank payments (ACH) 1% per transaction ($1 minimum fee).
Key features and benefits: Wave is a payment and bookkeeping solution for small businesses. It allows you to set up a customer's credit card details and then switch between automatic and manual payments depending on which type of billing method is preferable.
When auto-payment is on, Wave will automatically send your customer a receipt — when the feature is off, the tool will send your customer an invoice.
Additionally, the drag-and-drop editor makes setting up recurring billing and creating invoices fast. With Wave, you can also customize invoices with your branding, logo, messages, date, and time zone.
Best recurring payments tool for: Global, recurring revenue companies.
Price: Plans starting at $149/mo + 0.9% of revenue.
Key features and benefits: Recurly is a subscription management and recurring payments software built specifically for recurring revenue businesses.
It allows you to automate the process of billing and invoicing no matter which of your product/ service and payment plans a customer uses.
Personalize invoices with your recipient's information as well as your company's branding. Additionally, automate invoice creation and delivery, and manage one-time invoice changes, refunds, credits, and more with ease.
Recurly also helps you with taxes to ensure you comply with all local and global standards.
Best recurring payments tool for: Businesses that already use Square Invoices or want to send free invoices and set up annually, monthly, weekly, or daily recurring payments.
Price: Invoices are free to send. If customers pay online with a credit or debit card, then you pay 2.9% + 30¢ per invoice. If customers have you store their card, you pay 3.5% + 15¢.
Key features and benefits:
By using Square Invoices, you can set up recurring payments that bill your customers annually, monthly, weekly, or daily. With Square, invoices are free to send — you pay a processing rate when they're paid online.
If your customers provide their payment details, you'll be paid automatically and as often as you and your customer have decided upon.
You can also choose to send automated emails to your customers for recurring payments or print invoices and send physical copies, depending on what's preferable.
Recurring payments ensure on-time payment for both your business and customers. They make the lives of your customers easier while also saving your team time and improving customer loyalty.
Originally published Jan 10, 2022 7:00:00 AM, updated February 14 2022