How Does a Recurring Payment Gateway Work?

As an internet business owner, accepting credit cards is really the only way you can expect to have a chance at success in an online market. There are plenty of advantages to accepting credit cards and for many businesses, a recurring payment gateway can be a very beneficial part of your plan to accept credit. Recurring billing is where you will automatically deduct scheduled payments from your customers.  Almost all payment gateways will allow you to set this type of payment up as a benefit to you as well as for your customers.

When using a recurring payment gateway, it works pretty much exactly as it sounds. You will make an agreement with your customers to take out a payment from their accounts at a certain time, over and over again. For example, if you are the owner of a business who provides lawn care to a customer and you charge a flat rate of $25 per month, this would be a recurring payment. These types of payments are also common when it comes to phone bills, insurance payments, car payments and other bills that may be due every month for a service.

The way you can set up a recurring payment gateway will largely depend on your service provider, but in most cases, it follows a basic step by step system. First you will have to set up recurring billing with your payment processor. Once you are set up with your processing company, you will have to take the initial payment from your customer. All of the information that your customer provides will be entered into a program or part of an existing program that is connected to your merchant account. This will allow the payment to automatically occur each month without your customer authorizing it or your having to manually collect it. When the day of the payment comes, the monies will be taken from your customer’s account and directly deposited into your own merchant account.

Most of the time you can use the recurring payment gateway to set up payment weekly, monthly, quarterly, semi-annually or yearly. It is usually very easy to set up and cancel the payments and you will always be notified as soon as possible of any instance of non-payment, which you will have to take care of on your own.  As a courtesy to your customer you may choose to notify your customer a day or two before the money will be removed just so they are sure that they will have enough money in their own account to cover the payment. You can also allow them to have a choice to stop the automatic payment before it goes through and choose another payment option. These programs are usually quite flexible and no matter what option your customer chooses, you will easily be able to get paid.

As you can see, there are many advantages to setting up a recurring payment gateway. For more information you should contact your payment processer to find out what options you may have.