{"id":1189,"date":"2020-11-27T16:51:50","date_gmt":"2020-11-27T11:21:50","guid":{"rendered":"https:\/\/open.money\/blog\/?p=1189"},"modified":"2023-03-17T17:15:49","modified_gmt":"2023-03-17T11:45:49","slug":"10-challenges-businesses-face-with-recurring-payments","status":"publish","type":"post","link":"https:\/\/open.money\/blog\/10-challenges-businesses-face-with-recurring-payments\/","title":{"rendered":"Top 10 recurring payment challenges faced by businesses"},"content":{"rendered":"The recurring revenue model commonly called recurring payments or subscriptions has been prevalent in India for a long time now. But with the growth of internet penetration and adoption of digital payments, recurring payments have moved online & have now become the buzzword in town.<\/span>\r\n\r\nRecurring payments are nothing but the subscription payments that you as a business or service provider collect from your customers on a timely basis (daily\/ weekly\/ monthly or yearly). Right from school fees, gym membership fees, insurance premiums, SaaS subscriptions, EMI payments to even paying off your \u2018doodhwala\u2019 on a monthly basis.<\/span>\r\n\r\nSubscription models are quite prominent in the market these days. However, merchants still face a lot of challenges collecting recurring payments. Today, there is a huge demand for a one-stop solution to these challenges in India\u2019s growing subscription economy.<\/span>\r\n

Understanding the recurring payments challenges<\/b><\/span><\/h2>\r\nIndia is home to over 51 million SMEs. However, it’s only now that most businesses are getting transformed digitally. With the growing popularity of subscription-based business models, most of them, especially SaaS companies, have changed their existing traditional model to a recurring one.\u00a0<\/span>\r\n\r\nHowever, in spite of switching to one of the most lucrative ways of collecting payments, businesses aren’t able to take full advantage of it due to the challenges mentioned below. Let’s take a deep dive.<\/span>\r\n

(1) Usage-based Billing<\/strong><\/span><\/h3>\r\nSay you run a company that offers customers multiple subscription plans to choose from. Customers could sign up for a free trial, or upgrade, or downgrade, or even cancel their subscriptions anytime.<\/span>\r\n\r\nA good recurring billing solution should have a data-based billing feature that will enable you to bill your customers for the plan that they’ve subscribed for.<\/span>\r\n

(2) Real-time adjustments in billing plans<\/strong><\/span><\/h3>\r\nThe requirements of your customers could change at anytime. A ten-member startup<\/a> at the beginning of the year could grow to a hundred member company by the end of the year. Depending on the growth of the company, they might need to switch plans and opt for a higher version of the same tool that they use.<\/span>\r\n\r\nFor example, say your startup uses Jira for project management. You could simply use a free version if you have a 10 member team. But, say you cross a team size of 10, you will have to upgrade to a $7 plan.<\/span>\r\n\r\nA good recurring billing solution should take into account the upgrades or downgrades or pricing changes on a real-time basis.<\/span>\r\n

(3) Automated invoicing for all purchases<\/strong><\/span><\/h3>\r\nInvoicing can be a real headache if you have customers who sign up at different points of time. It gets even more complicated if you offer services of different permutations & combinations to them.\u00a0<\/span>\r\n\r\nA good recurring billing solution should help you send out automatic invoices<\/a> to your customers irrespective of when they sign up, make a renewal, or cancel their subscription. You don’t have to worry about customizing these invoices to the services purchased.<\/span>\r\n

(4) Flexible recurring billing<\/strong><\/span><\/h3>\r\nWhile many businesses charge a flat rate for their services, some bill their customers at different frequencies. If yours is one such company, then you’d need to manage and reconcile these payments as and when the changes occur.<\/span>\r\n\r\nA perfect recurring billing solution should help you bill at frequencies that your customer has agreed upon.\u00a0<\/span>\r\n

(5) Manage failed & missed payments<\/strong><\/span><\/h3>\r\nIt goes without saying that when it comes to recurring payments<\/a>, there would be cases where your customers forget deadlines, or are unable to make transactions because of insufficient funds.\u00a0<\/span>\r\n\r\nAn ideal recurring billing solution should recognize failed transactions and missed deadlines. It should also alert customers when they have dues.\u00a0<\/span>\r\n\r\nQuick update <\/span><\/i>– In India, <\/span>Open has rolled out UPI AutoPay <\/span><\/a>that helps businesses like you to send out reminders to customers 24 hours before the payment is due. This way you can reduce the number of failed or overdue subscription payments.<\/span>\r\n

(6) Data safety & security<\/strong><\/span><\/h3>\r\nSince most recurring payments are made via credit cards, it is important to handle your customer\u2019s credit card data securely. For this reason, you must ensure a secure connection is available between your customer\u2019s web browser and your server.<\/span>\r\n\r\nA good recurring billing solution will ensure that your customers\u2019 data is safe while they transact. In other words, a good recurring billing solution will be <\/span>PCI-compliant<\/span><\/a>.\u00a0<\/span>\r\n

(7) Manage discounts and promotions<\/strong><\/span><\/h3>\r\nManaging & tracking the discounts redeemed and new sign-ups made, can be a tiring task if you don\u2019t have a proper recurring system for it.<\/span>\r\n\r\nHaving a recurring billing solution that can create, manage & track discounts that have been redeemed can help you identify potential additional revenue streams.<\/span>\r\n

(8) Retain your customers<\/strong><\/span><\/h3>\r\nOne of the primary reasons for customer churn is an expired subscription. Many businesses don\u2019t have a well-placed & accurate system that can communicate with their customers before they churn out.<\/span>\r\n\r\nYou should look for a recurring billing solution that notifies customers before their subscription expires. It is also important to ensure that your recurring billing solution provider communicates over multiple channels like email, webhooks (automatic messages sent from apps), etc., to reduce the churn.<\/span>\r\n

(9) Accepts payments in multiple currencies<\/strong><\/span><\/h3>\r\nIf you have international clients, then opt for a recurring billing solution that allows you to accept payments<\/a> in multiple currencies. This will help you ensure that your customers are comfortable paying using the currency that they\u2019re familiar with, i.e.,\u00a0 their home currency.\u00a0<\/span>\r\n\r\nAn ideal billing system should have options where customers can choose and pay using the currency they prefer.\u00a0<\/span>\r\n

(10) Supports major credit cards, payment gateways, UPI AutoPay<\/strong><\/span><\/h3>\r\nTo make things easy for your customers, it’s best that you incorporate a wide range of payment channels to accept subscription payments. Your customers would have various preferences like credit cards, bank transfers via auto-debit or e-NACH while making online payments.<\/span>\r\n\r\nA perfect recurring billing solution should support all the major credit cards, payment gateways, and UPI AutoPay for accepting subscription payments.\u00a0<\/span>\r\n

UPI AutoPay to change the recurring payment game<\/strong><\/span><\/h2>\r\nTo make recurring payments easier for businesses,<\/span> NPCI had recently launched UPI AutoPay<\/span>. Now every business can let its customers make recurring payments via their UPI supporting application.<\/span>\r\n\r\nOpen is the front-runner to enable UPI AutoPay for businesses in India for collecting recurring payments. This is designed specifically keeping in the mind the challenges mentioned above. This is going to help companies across sectors from rental companies to insurance to media to education to wealth management and many more. If you need a perfect system for recurring payment management, then read our blog on <\/span>how Open simplifies recurring payments<\/span> for businesses.<\/span>\r\n\r\n \r\n\r\nRelated Articles –\r\n\r\nNeo Banks & B2B Payments: A Match Made in Heaven<\/a>\r\n\r\nMake a Statement with the Smartest Expense Management for Startups<\/a>\r\n\r\nBulk Payments, now made smarter with Open\u2019s Payout APIs<\/a>\r\n\r\nStep up your expense management game with virtual cards<\/a>\r\n\r\nSimplify your startup expenses with the smartest credit card<\/a>\r\n\r\nWhy you need a business account, now more than ever<\/a>\r\n\r\n \r\n\r\n\r\n\r\n