Recurring payments are also called automated payment systems when a consumer has given permission to the merchant or retailer to deduct the cost of goods or services every month from the customer's bank account. The merchant will deduct the amount when the due date approaches.
The popularity of subscriptions has to do with the constant cash flow and other benefits that are associated with recurring payment. You can look out for the best recurring billing software with Cashi.
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As they benefit both customers and businesses, recurring payment are gaining popularity across the globe. Business owners are able to receive their payments in time. Customers don't have to access and approve their invoices with each billing cycle.
Recurring payments can be classified into two kinds:
Fixed or regular payments:
For these kinds of payments, the customer is paid the same amount every time. Memberships to gyms and magazines are just a few examples of recurring payments.
Variable or irregular payments:
When you make periodic payments, the amount due can change depending upon the customer's use of the service or product. For instance, electricity or other bills for utilities can change monthly based on consumption.
These payments are automatically collected through bank accounts of customers by using their credit or debit cards, or other payment methods such as ACH as well as Direct Debit fund transfer. In order to accept these types of payments, the company must have an account with a merchant and an authorized pay service.
The service handles different aspects of processing payments that range from collecting recurring payments for merchants, and securely processing them to depositing the funds into the banks of the companies.