Paying your subscriptions and bills using a recurring payment provides some convenience and quite a number of other advantages. However, it is very different from using a regular payment or direct debit to pay your bills.
What is a Recurring Payment?
Also known as continuous payment authority, a recurring payment is where you give a company your credit or debit card details and allow them to them to take regular payments from your account.
Unlike a standing order or direct debit that is set up by a company or bank, a recurring payment is set up by you directly with the concerned company. Your bank or building society is not involved anywhere when you are setting up this way of making payments.
When Can a Recurring Payment be Used?
You may be asked by companies to pay using a recurring payment in a situation where payments have to done by installments, for instance monthly or yearly.
The recurring transactions are typically used for car breakdown cover, insurance policies as well as TV and magazine subscriptions.
Is It Possible to Cancel a Recurring Card Payment?
You can cancel payments any time up to close of business one day before the day you are supposed to make the payment due. There are two ways to cancel, namely:
- By directly contacting the company and asking them to cancel the payment.
- By canceling the payment online in branch or by phone.
What Happens After a Recurring Payment is Cancelled?
When you request a company to cancel your recurring payment, this does not mean that further payments will cease from being taken from your account with immediate effect.
A company may still continue taking payments from your account even after you have requested for cancellation. This should not worry you too much because that money will be refunded to you.
If you cancel the recurring payment online, it is a good idea to still contact the company directly so as to make them aware that you have withdrawn your consent.
Tips for Optimizing your Recurring Payments (For Companies)
To be able to get the most out of the recurring payment model, you need to have a payment strategy that is carefully planned and executed. The following are the things that you can do in order to keep your payments seamless.
1. Keep Your Card Details Up to Date
When your customers get new cards, make sure that you update the payment details for the services that they have subscribed for. Failure to do that may cause their payments to be rejected.
Most customers rarely see it as a priority to update details for the services that they have subscribed for. So if you do not take the initiative to update the details for them, you may end up in frustrating situations of transaction being declined.
2. Optimize Your Billing Strategy
One of the common reasons why transactions are rejected is insufficient funds.
To avoid this problem, you can adjust your billing schedule so as to increase the chance of your subscribers having funds available in their accounts.
3. Strike the Right Balance in Dealing with Fraud
Reseller fraud and card testing are the two main types of fraud common to businesses that process subscription payments.
Do not place a blanket block on any suspicious behavior as a way of combating fraud because you may end up denying genuine customers the chance to use your services.
If not implemented carefully, fraud prevention measures may end up contributing to the loss of revenue for your business.