Recurring Payments: Definition, Types, and Benefits

A recurring payment is an automated transaction in which a customer authorizes the company to charge a fixed or variable fee at a set frequency.

This method eliminates the need for manual payments, benefitting both customers and companies.

The customer enjoys the comfort and peace of mind of not having to worry about remembering recurring billing dates, and the company is guaranteed ongoing and predictable revenue.

A monthly recurring payment can adapt to a variety of business models. This is why they are beneficial for each type of company:

Membership companies

This model is based on recurring payments to access exclusive benefits such as gyms and clubs.

They are a constant source of income for the company, while users enjoy the comfort of not having to worry about renewing their membership.

Utility companies

Businesses that offer essential products regulary, such as water and electricity, benefit significantly from recurring payments.

There is full automation of the process, ensuring both the company and the customer that the services won’t be cut off due to forgetting to pay recurring bills.

Subscription services

Recurring payments are the financial backbone of streaming platforms, software, or any service that depends on subscriptions.

They boost customer retention by removing friction in the collection process, ensuring a seamless service experience.

Financial services

Insurance companies and banks that handle recurring payments, such as policy or loan payments, use a recurring billing service to boost efficiency.

They ensure the company's cash flow and also reduce the chance of late or missed payments by customers.

Simplifying the payment process is key to customer loyalty.

With Macropay's recurring payments, you can avoid errors and ensure constant revenue.

This is how this service benefits your business:

• Efficiency: Avoid your users having to remember to make regular payments and charge their subscription fees automatically.

• Better approval ratios: optimize retries and manage expired cards, reducing failed payments by up to 30%.

• Retention: Link your users to recurring card payments so they can enjoy your services in a carefree way.

• Retry system: avoid unnecessary fees with the Macropay retry system.

• Safety: minimize fraud with card tokenization and PCI DSS best practices.

• Reduce seasonal fluctuations: improve the predictability of your revenue and make your business more stable.

Implementing a recurring monthly payment system requires strategy and planning.

These are some of the successful practices our customers use:

1. Price optimization

Finding the right price can make or break customer retention.

• Offer a free trial. Let your users try your services or products at a lower price for a limited time.

• Customize your plans. Offer a pack that’s adapted to each type of customer so it caters to their needs and budgets.

• A/B price trials: experiment with different price structures or subscription levels to improve retention and customer value.
• Tiered plans: offer different service levels with adjusted prices so customers can upgrade according to their needs.

2. Payment automation

Automation reduces errors and ensures payments are always on time. Our recommendations:

• Payment retries. Set automatic retries at specific intervals and adapt dates and amounts for each plan.