Recurring Payment

The functions for recurring payments can be customised for the global market, and are not exclusively available for your German customers. Use flexible tax regulations, different languages, currencies, and payment methods.

Recurring Payments

Languages & currencies

If you offer different languages and currencies in the subscription management system, billing and payment are possible worldwide.

Payment providers

PAYONE, Adyen, Stripe, GoCardless, Unzer (Heidelpay) and SlimPay and more are currently available as payment providers. Upon request we will also integrate other payment providers.

Payment methods

Offer your international customers different ways to make their recurring payments: via credit card, SEPA direct debit, invoice, or PayPal.

Integrated PSPs for
Recurring Payment

billwerk has already integrated many relevant national and international payment service providers that are especially geared towards the handling of recurring payment transactions for recurring payment models.

Whether SEPA direct debit, credit card payment, PayPal or alternative payment methods such as instant bank transfer, the requirements for recurring payment differ from those of simple one-off transactions – especially if all processes are automated.

Flexible tax rules, different languages, currencies and payment methods as well as changes and adjustments during the contract period, such as upgrades & downgrades or customer payment methods, can be mapped and managed in billwerk.

Selection of integrated PSPs for recurring payment

billwerk for your Subscription Management and Recurring Payment

billwerk is the Subscription Management & Recurring Billing-Software for your Subscription Business.

 

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Christian StorchHead of Software Development, EXARING AG

In billwerk, we have found a reliable partner for the management and billing of our subscription model.

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Find out more about Recurring Payment

What is Recurring Payment?

Recurring Payment Icon | billwerk

Recurring Payment is an automated transaction. It is often also referred to as AutoPay. Customers give a company permission to collect cyclical payments for goods or services from their bank account or charge their credit card. Recurring payments of this kind are ideal for efficiently processing e.g. recurring monthly customer payments for software products. The company works with payment service providers (PSPs) who take care of everything from the payment request to the recurring payment. Specialized PSPs complete the process all the way to invoicing. In return, the company pays a transaction fee to the PSP. Rates may vary depending on the provider.

Why is Recurring Payment important?

The world is becoming more complex, customer needs more differentiated. Requirements are becoming more and more specific, leading to a wide variety of pricing models. On the other hand, customers are placing more and more value on flexibility; they don’t always want to buy the full scope of products or services. This poses a huge challenge for companies: How can these requirements be reconciled and payments easily accounted for? Recurring payments are the answer.

What are the different types of Recurring Payments?

There are two types of recurring payments. With fixed or recurring payments, customers are billed the same amount each time. These are, for example, contributions for streaming platforms or gym memberships. With variable or irregularly recurring payments, the invoice amount changes. The reason for this is, for example, the scope of use or the amount of consumption.

How do Recurring Payments work?

How do companies receive Recurring Payments?

Recurring payments are collected automatically, for example from customers’ bank accounts or through a credit card charge. To do this, the data must be deposited once at the start of the subscription. So-called payment service providers (PSPs) handle the processing.

How do you set up Recurring Payments?

To be able to accept payments, merchants need a payment service provider in addition to a merchant account. The amount debited from the customer account is deposited into the merchant account and subsequently transferred to the actual bank account. The individual aspects of payment processing, collection of subscription payments, correct addition and transfer of the amounts to the company’s bank account are then handled by the (freely selectable) payment service provider. A subscription management solution supports payment processing through holistic automation.

7 Advantages of Recurring Payment

Recurring payments offer several benefits to businesses:

  • Simplified operational processes: Subscription businesses that rely on a recurring payment process can be confident that they will receive their payments on time. Businesses can also better predict their cash flow, reduce their billing and collection costs, and automate some of their accounting. Ultimately, recurring payments provide merchants with the ability to fully focus on their actual business and product.
  • Improved customer acquisition: Expensive products scare off many potential customers. Often, they only need certain features or the service for a short time. If product scopes are offered individually – with subscription payments – they are more likely to sign up. Merchants can also set up free trial versions so that their customers can see whether their product or service fits their needs. If this is the case, cyclical billing takes place automatically.
  • Profitable pricing: if the product or service is used long enough, more revenue is generated than with a one-time payment. By offering subscription payments, merchants can also set up discounts in return for regular payments, meaning the customer is charged more over a period of time than with a lump sum payment, just in smaller installments. This can help merchants attract new customers who may be looking for a good deal.
  • Strengthening customer loyalty: Recurring payments are convenient and time-saving and can lead to stronger, more lasting relationships with customers than a one-time purchase. The business model offers customers more flexibility. Multiple subscriptions can be made at once if needed. Customers are less likely to switch to the competition.
  • GDPR compliance: Data protection is one of the key issues in customer data management. Far too often, companies still operate in legal gray areas due to a lack of experience. Their own competencies or a proper handling of sensitive data is often not clearly regulated. Recurring payment software relieves companies of this challenge and ensures legal certainty with tested conformity. However, the benefits of recurring payments do not only affect companies. Subscribers also benefit.
  • Uncomplicated processing: Convenience for the subscription company and customers is the most obvious benefit of recurring payments. Customers do not have to repeatedly provide their billing information for routine billing, but can leave their payment information to the merchant.
  • Increased flexibility: Flexibility is fundamental, especially in B2B, where start-ups or companies moving into new business areas cannot yet estimate which software they need. Cyclically adjustable license scopes give them the flexibility they need. Flexible upgrades and add-ons are also an advantage for companies and subscribers. Customers can test new features for free, companies benefit from the paid addition of new features from their customers previously convinced during the trial period of the free version.

For whom are Recurring Payments suitable?

Recurring payments provide additional flexibility and are therefore suitable for a wide range of companies in many different industries. Whenever a company charges for its products or services on a cyclical basis, recurring transactions are suitable. On the one hand, these include established industries such as print media, the food and beverage industry, passenger transport (with monthly and annual passes) or fitness studios. But new products and services that are emerging as part of digitization and Industry 4.0 also benefit from subscription payments. E-commerce, whose sales are constantly rising, streaming providers, who have become an indispensable part of everyday life, or the health sector can rely on the business model. In the B2B environment, recurring payments in the SaaS industry or in hosting & IaaS simplify operational processes. Any company that generates revenue through recurring payments will benefit from a recurring payment system.

What is a Recurring Payment system?

A recurring payment system or recurring payment software is designed to automatically process recurring payments and avoid late payments. It also has extensive capabilities to clearly display the most diverse KPIs.

What are the main functions of a Recurring Payment system?

With a wide range of functions, recurring payment solutions are able to support companies. The following are the most important:

  • Invoicing: recurring payment invoices can display all types of charges, including pending or outstanding payments, interest or taxes. In doing so, recurring payment platforms generate a clear history along the complete customer journey. In addition, the billing function can automate the creation, scheduling and sending of invoices, while allowing customers to update customer data via a self-service portal or make upgrades quickly and easily.
  • Analytics & Reporting: Every company monitors key metrics such as (monthly) revenue, churn rate and customer acquisition costs. Subscription data, in particular, allows for meaningful content that can be used to guide a business. Ergonomic, customizable dashboards provide all necessary information clearly and in detail. This allows sales to be analyzed from different angles.
  • Dunning: Dunning is a feature that is essential for recurring invoice software and helps merchants deal with failed payments (e.g., bounced checks or declined credit cards). Tedious and time-consuming tasks such as repeated debiting of the payment and communication with the customer are automated. In this regard, state of the art billing systems are able to send automated form-based emails to inform customers about non-payments, price adjustments but also next steps.
  • Product Catalog: Software that processes recurring invoices has one primary goal: to simplify processes and free up capacity. Each product has its own price plan, additional services, fees, or currencies, which makes things even more complex. A product catalog helps to centrally manage all product lines and plans and increases time-to-market for products or services.
  • Security: One of the main benefits of recurring payment solutions is increased security for businesses. Data protection compliance and the secure transaction of amounts are guaranteed and companies are on the safe side in terms of data protection.

What are the payment methods for Recurring Payment?

Recurring payments are extremely diverse. Well-known payment methods include direct debit, credit card payment, payment on account, or the use of online payment services such as PayPal.

Is Recurring Payment PCI compliant?

PCI compliance includes standards and guidelines for companies that involve personal data related to credit cards. The integrated payment gateways that process recurring payments store the payment information provided by customers. Extensive features put a stop to fraud attempts. Any recurring payment system that is linked to credit card information can be PCI-compliant, but it does not have to be. The decisive factor is the integration into the online store and the server infrastructure behind it.

Ideally, credit card data flows as follows: Data entry > Data is sent to a gateway for authorization > Gateway sends it to the credit card issuer for authorization > Gateway receives response > Online store receives response from gateway > Online store informs customer of the result > A PCI-compliant purchase is completed.

Recurring payments can only be implemented via a payment gateway that can remember authorization for further automatic payments. Each gateway is also under the constant supervision of the card issuer. Different rules apply to the gateway and the online store.

In short, recurring payments must be PCI-compliant. Whether they are depends on the system selected and the overall infrastructure.

What is the difference between AutoPay (Automatic Payment) and Recurring Payment?

The terms AutoPay and Recurring Payment are used interchangeably. Even though the principle is the same, there is a slight difference: when payments are made via AutoPay, the payment amount is debited from the account on the due date. The amount for the minimum payment or the total balance can be different and the due date can change every month. With a recurring payment, a fixed amount is debited on a fixed date.

One-time Payments vs. Recurring Payments. What is the difference?

In one-time pricing models (pay-as-you-go principle), one-time payments are made. In return, the purchased product can be used indefinitely until the end of the product life cycle. If the product or service is needed again, the payment process must be restarted. In contrast, in the case of subscription payments, customers authorize the retailer to automatically debit sums of money from their accounts at regular intervals. With such recurring payments, the product can be used until the customer revokes their permission or the subscription expires.

Recurring Payment or One-time Payment, which is better?

There are arguments for both recurring transactions and one-time payments. With one-time payments, the customer pays only once and can then use a good or service. This works well for products that are rarely needed, or don’t cost much anyway. Consumers do not have to commit and are therefore free to plan their budgets. The payment model also makes it easier for companies to track what is being sold and what is not. It’s easier to see which products have a high ROI and which products are barely breaking even.

The recurring payment system is convenient for both customers and businesses. Not only does it provide a positive customer experience by reducing the friction of repeated manual payments and delays, but it also ensures a stable cash flow for the business. Businesses automatically bill consumers over and over again, increasing revenue and building long-term profitability. Recurring payments are also able to improve the customer experience. In addition, it is far easier to turn customers into returning customers.

What should you look for when choosing a Recurring Payment System?

A well-integrated recurring payment platform offers a high degree of automation. Its main objective is to simplify the user’s operational processes. For example, it makes it possible for companies to invoice and bill for recurring and dynamic subscription services. The variety of payment methods is particularly important here. Credit card, SEPA direct debit, payment on account or PayPal are standard and should be included. For both subscriptions and one-time online sales, the software should localize the checkout process for visitors, thus enhancing the user experience. Therefore, when selecting the right recurring payment system, companies should ensure that different languages and currencies make (recurring) payments possible worldwide. The scope of available payment service providers is also an important criterion. Can new, additional providers be integrated if required? In addition, companies should definitely check whether the software is EU-DSGVO and PCI compliant and whether the company can rely on an appropriate level of security.

The most important criteria away from the applications are an intuitive user interface that enables quick familiarization and uncomplicated use. Comprehensive support from the manufacturer throughout the entire product lifecycle is also a decisive criterion when selecting a good recurring payment solution.

What is the difference between Recurring Payment and Recurring Billing?

Recurring billing refers to recurring invoices, while recurring payment refers to recurring payments. Recurring billing is a payment model that allows subscription companies to bill subscribers at predefined time intervals (e.g. weekly, monthly, annually, or user-defined) for the products or services they purchase. Recurring payment, on the other hand, describes a payment model in which customers authorize the direct-debit merchant to automatically and regularly debit funds from their account for the goods and services provided to them.