Top 10 recurring payment challenges faced by businesses

For a long time, the recurring revenue model, also known as recurring payments or subscriptions, has been popular in India. However, as internet penetration and digital payment adoption have increased, recurring payments have moved online and have now become the buzzword in town.

Recurring payments are simply subscription payments that you, as a business or service provider, collect from your customers on a regular basis (daily/weekly/monthly/yearly). Everything from school fees to gym membership fees, insurance premiums, SaaS subscriptions, EMI payments, and even paying off your milkman on a monthly basis is a monthly expense.

Subscription models are becoming increasingly popular in the market. However, merchants continue to face numerous challenges when it comes to collecting recurring payments. In India's growing subscription economy, there is a high demand for a one-stop solution to these challenges.

Understanding the recurring payments challenges

Over 51 million SMEs exist in India. However, most businesses are only now being digitally transformed. With the growing popularity of subscription-based business models, most of them, particularly SaaS companies, have switched from a traditional to a recurring model.

Despite switching to one of the most profitable payment methods through an online payment gateway, businesses are unable to fully capitalise on it due to the challenges listed below. Let's take a deep breath.

1. Usage-based Billing

Assume you own a business that provides customers with a variety of subscription plans from which to choose. Customers could start a free trial, upgrade, downgrade, or cancel their subscriptions at any time.

A good recurring billing solution should include a data-driven billing feature that allows you to bill your customers for the plan to which they have subscribed.

2. Real-time adjustments in billing plans

Your customers' requirements may change at any time. A ten-person startup at the start of the year could expand to a hundred-person company by the end of the year. Depending on the company's growth, they may need to switch plans and choose a more advanced version of the same tool.

3. Automated invoicing for all purchases

If you have customers who sign up at different times, invoicing can be a real pain. It becomes even more complicated if you offer them services in various permutations and combinations.

A good recurring billing solution should enable you to send out automatic invoices to your customers regardless of when they sign up, renew, or cancel their subscription. You don't need to worry about tailoring these invoices to the services you've purchased.

4. Flexible recurring billing

While many businesses charge a flat rate for their services, others bill their customers on a regular basis. If your company is one of these, you'll need to manage and reconcile these payments as they change.

A good recurring billing solution should enable you to bill at the frequencies agreed upon by your customer.

5. Manage failed & missed payments

It goes without saying that when it comes to recurring payments, there will be instances where your customers miss deadlines or are unable to complete transactions due to a lack of funds.

A good recurring billing solution will detect failed transactions and missed deadlines. It should also notify customers when their accounts are overdue.

6. Data safety & security

Because credit cards are used for the majority of recurring payments, it is critical to protect your customers' credit card information. As a result, you must ensure that a secure connection exists between your customer's web browser and your server.

A good recurring billing solution will keep your customers' information secure while they transact. A good recurring billing solution, in other words, will be PCI-compliant.

7. Manage discounts and promotions

Managing and tracking discounts redeemed and new sign-ups can be a time-consuming task if you don't have a proper recurring system in place.

Having a recurring billing solution that can create, manage, and track redeemed discounts can assist you in identifying potential additional revenue streams.

8. Retain your customers

An expired subscription is one of the most common causes of customer churn. Many businesses lack a well-placed and accurate system for communicating with their customers prior to churning out.

Look for a recurring billing solution that notifies customers when their subscription is about to expire. It is also critical to ensure that your recurring billing solution provider communicates with you via multiple channels in order to reduce churn.

9. Accepts payments in multiple currencies

If you have international clients, choose a recurring billing solution that accepts payments in multiple currencies. This will assist you in ensuring that your customers are comfortable paying in the currency with which they are familiar, i.e., their home currency.

A good billing system should allow customers to select and pay in the currency of their choice.

10. Supports major credit cards, payment gateways, UPI AutoPay

To make things easier for your customers, it's best to accept subscription payments through a variety of payment channels. When making online payments, your customers may prefer to use credit cards, bank transfers via auto-debit, or e-NACH.

To accept subscription payments, a perfect recurring billing solution should support all major credit cards, payment gateways, and UPI AutoPay.