Editor’s Note: A version of this post was originally published in September 2011. It has been updated for accurateness and completeness.
Recurring bills have become a significant and “normal” part of our lives, both in business and in our personal finances. We’re all used to paying every month for our phone service, rent/mortgage, Internet, television, and utilities. Often with these recurring bills, we have the option to set up automatic payments, thanks to recurring billing technology. But when we don’t and we’re forced to resort to the checkbook and post office – we’re left feeling annoyed by the hassle.
As consumers, recurring billing allows us to provide payment information to a merchant and dictate the timing, frequency, and volumes of debits from our accounts. As business owners, it helps us maintain steady cash flow and decrease late payments.
Often times, recurring billing is associated with ACH or bank-to-bank transfers. However, recurring billing with credit cards should not be overlooked. It provides the same conveniences as bank transfers, but also brings with it the conveniences of credit card processing: instant approval, faster funding, and, not to be forgotten, reward points!
According to the 2016 US Consumer Payment Study by TSYS 23% of credit card users and 33% of debit card users prefer to pay with recurring billing.
With consumer attitudes towards credit card recurring billing in such a comfortable spot, why aren’t all businesses offering the option—especially those businesses with repeat customers who make regular payments? Many business owners just aren’t sure how to launch recurring billing for their business.
5 Tips to Get Started With Recurring Billing
1 – Find a recurring billing solution
Even if you already have a credit card merchant account, you’ll still need an interface that manages your recurring credit card billing. For a low monthly cost, you’ll also be able to manage your customer database, run one-time transactions, invoice, and set up recurring billing schedules from one interface. These software providers can also help you set up a merchant account, if you don’t have one already.
2 – Introduce the option to your customers
Most of your customers will be well versed on how to use recurring credit card billing on their end, but you will want to let them know that you now offer the popular payment option. Most will be happy to hear that you’re going out of your way to simplify their bill payment process and will be eager to sign up.
3 – Collect payment information
You may already have credit card information for your customers if you’re processing one-time payments, but if you don’t, you’ll want to collect it for your recurring billing solution. Aside from the advantages of recurring billing, uploading your customers into the solution also gives you the power to manage their contact information, company information, and more.
4 – Receive authorization
Receiving proper authorization from your customers is as important as collecting the payment information itself; plus, it gives your customers peace of mind that you’re ensuring you get the schedule they requested correct. Authorization for setting up recurring credit card billing can come in various forms (email, voice, etc.), and is important to always keep on file.
5 – Set timing, frequency and amount
Once you have your customer’s payment information and authorization in-hand, you’re ready to set up the recurring billing schedule. Depending on the solution you choose, you can:
• Schedule start date
• Billing frequency
• 1st payment amount
• Subsequent payment amounts
• Schedule end date*
*The ability to add an end date to the schedule is helpful when using recurring credit card billing to create a finite payment plan.
Consumers have made it clear that they want recurring credit card billing as a payment option, and many businesses have answered. If you’re a business owner, learn more about how recurring credit card billing can help grow your business.