Recurring payment
What are recurring payments?
Recurring payments, sometimes called subscription payments, subscription billing, automatic payments, or recurring billing, are payments taken at regular intervals in exchange for goods or services. Under this system, businesses obtain a customer’s consent upfront to automatically charge their debit or credit card, or to withdraw funds directly from their bank account, for an agreed amount. Once set up, the merchant continues collecting these payments on the scheduled dates until the customer decides to cancel the service.
Examples of recurring payments include magazine subscriptions, subscription box services, automated payments for student loans, and software-as-a-service (SaaS) products.
Why are recurring payments beneficial?
For businesses, recurring payments bring numerous advantages. They create a reliable, predictable stream of income, making it easier to forecast revenue and plan for growth. This model also enables businesses to gather valuable insights into customer behaviour over time and to engage customers through regular interactions, helping brands foster a loyal community. Moreover, recurring payments can boost customer lifetime value and raise average order value, contributing to sustainable growth and profitability.
