Automated Recurring Billing: How Does it Work?

Automated Recurring Billing: How Does it Work?

As a merchant who accepts credit cards, you may have heard of automated recurring billing. Recurring billing is a feature of a many payment processing accounts that will allow you to automatically charge your customer on a recurring basis. For instance, if you offer some sort of subscription or membership through your business, you can charge your customers every 30 days or on a particular day of the month in order to pay for their membership fee. You can also choose to do this weekly in most cases if that’s what works for your particular business or product.

You may be wondering how automated recurring billing works but first look at the benefits of automated recurring billing. For you, the merchant, using and accepting automated recurring billing will increase on time payments, it can reduce the amount of time you spend on bookkeeping, it will improve the way you track payments received to your business, it can eliminate the expense of sending reminders that payment is due, and it can improve the relationship between you and your customers. Additionally, of course, it will also increase your profit which may be the most important part of adding recurring billing.

Equipment needed to start automated recurring billing will include one of two options: software installed into your POS system or an online virtual terminal. If you are wondering about price, in most cases the online virtual terminal is cheaper.  Both are a few hundred to set up, but monthly fees are about half on a virtual terminal than with software. Many people find software to be easier to use, especially if they do not always have internet access, so it really is up to you.

You can use the system to accept and process automatic recurring payments at any time and for any length of time, from a few months to indefinite payments. If you are using software to accept recurring payments, it will create a list of all of the customers who are signed up for recurring payments on a certain day. This list will include all of the information needed for payment to go through. It will then automatically send the list of information to the processor for authorization. When the authorization is accepted, the merchant will enter that information into their bookkeeping software or it can be set up to do it for you.

 When using a virtual terminal for automated recurring billing, you will have a specific profile available on the internet for each particular customer.  The virtual terminal will automatically obtain the authorization and charge your customers. It will update information in the customer’s profile, so it is always available with a few clicks of the mouse.

Setting up recurring billing is as easy as contacting your current payment processor or whatever company administers your merchant account. You should be able to discuss details with them and go over your business needs so you can choose the best set up for you and your company. With all the benefits available, this is something you probably will want to do sooner, rather than later.