Thursday, June 7, 2012

Recurring Payments

What are Recurring Payments? Recurring payment plans exist when a cardholder authorizes a merchant to charge his or her credit or debit card on a regular basis (e.g., monthly, quarterly or annually). Payment amounts can be fixed or they can vary and the plan exists until it is canceled by the cardholder. A good example of a recurring payment plan would be an auto insurance policy that has been set up so that the insured's credit card is charged monthly and the service will be provided indefinitely, or until it is canceled by the consumer. All merchant processing accounts support this feature.

Benefits for Merchants:
  • Providing additional payment processing options. Customers like having payment options at the checkout.
  • Increasing enrollment in online payment processing. It is a great time-saving tool.
  • Reducing customer service calls. By automatizing the process merchants ensure less payment-related issues.
  • Improving cash flow. Recurring payment card processing plans ensure that less mistakes will be made and less payments will be returned.
  • Reducing delinquencies. Setting up the payment schedule beforehand ensures less delinquencies.
  • Improving collections. Since the payments are processed automatically, they are easier to collect.
  • Increasing customer retention. Consumers, too, enjoy the convenience of recurring payment plans.
Benefits for Cardholders:
  • Convenience of setting up the payments once. It's fast, easy and simple. You don't have to go over it again.
  • Time savings. Once the plan is set up, you are done. Payments are made automatically thereafter.
  • Stress relief. You don't have to keep on checking when the bill is due and worry about being late on a payment.
  • Cost savings. No more post stamps to stick on payment envelopes.
  • Earning points on rewards program. Some merchants qualify for various credit card reward programs.
Depending on the type of merchant account that you have, recurring payment plans may be set up differently. Ask your credit card processing provider for assistance if you are not sure how it is done.

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