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What is recurring billing?

 
re - cur - ring bill - ing
noun

Recurring billing involves the systematic and automatic collection of payments from customers who are subscribed to a service or product. Essentially, it refers to the scheduled and automated process of charging customers at regular intervals for their ongoing subscriptions. This automated payment process is facilitated by the business's payment processor, making it convenient for customers and ensuring a steady and predictable income stream for the company. SaaS recurring billing, in particular, ensures a seamless experience for both businesses and customers, providing a reliable way to manage payments for products and services used on a regular basis.

How does recurring billing work?

Setting up recurring billing requires either a recurring billing merchant account for credit and debit card deposits, while security solutions are not included, or outsourcing the process to a payment service provider. These providers process and securely deposit funds into the merchant's account, adhering to the laws governing recurring billing. Both approaches involve the electronic handling of recurring payments, offering flexibility.

Enabling recurring billing is a simple process. Customers opt for recurring payments when making product selections on your website. After agreeing to the terms and conditions and receiving authorization, customers provide their payment details and confirm the payment amount.
Subsequently, merchants charge customers based on an agreed-upon payment frequency, whether yearly, monthly, weekly or daily. Recurring billing can have an end date or continue indefinitely until the customer makes a change. Some businesses may incentivize customers with a price reduction to sign up for automatic recurring billing. Merchants typically notify customers of recurring payment processing through emails or texts.

Recurring billing can be either fixed or variable. Fixed billing entails charging customers the same amount each time, while variable billing adjusts the payment based on individual service usage during the payment period.