The recurring transaction works in a simple way. Typically, a customer, who is also a cardholder buys a product or service that is billed at specific intervals, mostly monthly. The merchant or seller will then charge the cardholder an agreed-upon sum during this period until the end-user cancels the service.
Let’s look into a business and a pet owner to put recurring payments into better perspective. The customer may set up an ongoing order with an online merchant to buy pet food supplies every month. Instead of shopping every other month, the customer authorizes a recurring bill, so that the order is placed and delivered automatically when the time reaches.
Another example of a recurring monthly payment is an electricity bill. You can set up your card to be automatically billed by the service provider at the end of the month, usually at a small discount as opposed to non-recurrent billing.
There are two prevalent types of recurring billing, including:
Like any other billing model, recurring payment processing has its advantages and drawbacks too. On the brighter side, it helps businesses retain customers for the long term, given that the consumer’s journey will only come to an end after a canceled recurring transaction. At the same time, this billing mode ensures that customers pay promptly, giving businesses a reliable cash flow.
On the other hand, recurrent billing can be disadvantageous when errors are involved, since they are hard to correct. It also has a negative effect on consumers because they can overlook unnecessary expenses or even get scammed in the process without knowing.
The best recurring payment system in the industry is probably Chargebee. The platform offers over 100 currency and payment options. It’s also easy to use and comes with a free option for small businesses.
Processing recurring payment through PayPal is a go-to option for businesses that want to serve international payments. Here is how you can set it up:
Customers can liaise with their banking service providers to cancel recurring billing on their behalf. You can do this in writing, in person, or through a phone call, depending on the policies of the credit or debit card issuer.
Recurring transaction payment methods can either be fixed or variable, usually charged on debit or credit card, or an international payment service provider, such as PayPal.
