Many businesses can benefit from using recurring billing practices. It can increase sales, generate higher ticket numbers, create a seamless experience for customers, and offer more payment options at checkout. But the right payment gateway can also increase customer security and workflow ease for businesses.
Below, we’ll go over the core aspects of recurring billing integrations and the tools required to ensure you take advantage of this vital business model.
The Goal Of Recurring Billing Integration
The first step in understanding your recurring billing integration is to identify the goals involved. It’s not enough to accept payments. Instead, you want to have certain plans that help address the specific challenges of a recurring billing situation.
Identifying these goals early on helps you decide on the best integration partners and recurring billing solutions for your business.
Below, we’ll go over the most common goals that business owners should consider when integrating their recurring billing solution and automating payments.
Increased Sales
Recurring payments like payment plans and Buy Now Pay Later offer financial flexibility to customers who cannot afford the overall out of pocket expense of your product or service up front, but are still interested in purchasing it. Monthly recurring payments split up over time are a lot more digestible than one large lump some up front, resulting in more closed sales and higher tickets.
Seamless Experience
A seamless experience means your customer should have the most seamless and continuous experience possible regarding their billing. So month after month, there is no need for the customer ever to intervene if they don’t want to. Any disruption in billing detracts from that experience and expectation. It also opens a window where customers can choose not to continue paying.
The goal with your billing system software is to achieve the most seamless and continuous experience possible without customer intervention. The customer enters their payment information once, and they never have to worry about it again.
Payment Options
This goal also involves the customer experience, and it’s about giving them the most options and payment methods possible.
Credit cards and debit cards should be first on the list. But recurring businesses that operate a physical location, such as a gym, also want to be equipped with the latest payment hardware, such as terminals that accept Apple Pay or other mobile payments.
For e-commerce sites, you should be able to accept ACH or eCheck payments as well. These options work well for more extensive ticket services or services that recur annually and have a higher transaction amount.
Some customers prefer ACH for these payments, making their accounting easier than putting the charge on a credit card.
Having the most available options increases your chances of turning a potential customer into a recurring customer. These options lower your average cost to acquire a new customer, an essential metric in a recurring business model.
Easy Management And Control Of The Billing System
Many benefits may be negated if the billing system is unwieldy or difficult to manage. So your recurring billing platform and software must be easy to manage.
This includes things such as the management dashboard or merchant interface. It needs to be simple enough to make adjustments quickly. But it also needs to have the deep functionality required for specialized tasks.
Security
Security is a top concern when a business handles customer data and credit card information for online payments. Data breaches can be costly and even catastrophic for a business of any size.
Not only that, but to process credit cards, all businesses must follow PCI DSS (Payment Card Industry Data Security Standards) regulations and guidelines. So any integration or billing solution must be secure.
You’ll also want to determine which billing solutions have tools to help you with security concerns. Customer vaulting and other services help businesses mitigate risks when holding credit card information for recurring billing.
Components Of Recurring Billing Integration
Recurring billing integration is about a synergistic payment solution that works with several key components to create a seamless experience for the customer.
Operational Software Of The Business
Operational software can consist of off-the-shelf software for small businesses— something like Quickbooks for accounting or invoice software. It could also be a leased software program specific to their industry.
The other option is a custom software application. Custom software applications are usually reserved for larger organizations since the cost of creating a customized software operation is generally not feasible for small businesses. Whichever option you use, your recurring billing solution and payment platform needs to integrate with this software. You should confirm before making any commitments or signing any contracts.
A lot of this integration will come down to the API. The API or Application Program Interface is how different systems in your business interact with the payment gateway. We’ll explain more about the payment gateway later in this section. Most payment gateway APIs integrate with existing popular software. But if you use a custom option or a non-standard software application to operate your business, you want to ensure compatibility.
Integrating these systems with your payment system lets you track analytics and critical metrics crucial for business growth.
These include:
- Lifetime customer value
- Monthly recurring revenue
- Customer acquisition costs
- Annual recurring revenue
- Cash flow
- Sales
- Churn rate
- Total revenue
Without tight integration, many of these metrics will be harder to track as you’ll have to move data across different systems to combine it all in one location. Unintegrated data can be prone to errors and is also labor-intensive.
Website Platform And Shopping Cart
If the business is an e-commerce site, it will have a website or shopping platform, along with a specific shopping cart software. Integrating your recurring billing solution with the shopping platform and shopping cart would be best. You can generally do this via the API of your payment gateway.
Although some shopping platforms have their own payment solutions, it’s best to avoid these if you are a serious business. These aggregate payment processors combine all merchants using the service into one large account. This combination means you don’t own your own merchant account and are at the whim of the aggregate payment processor, such as Stripe or Paypal.
Serious businesses need reliable recurring payment processing options for their own merchant account through a payment processor such as ECS Payments. Individual merchant accounts provide complete flexibility and ownership of the entire payment processing workflow.
Merchant Account And Payment Processor
We already briefly touched on the need for a merchant account. This account allows you to process your customers’ credit cards, debit cards, and ACH payments. You apply for these accounts through a payment processor. The payment processor will also grant you access to your payment gateway of choice.
Payment gateways are the network where the credit card information travels while it is being processed and authorized. The payment gateway is also a component of your merchant account. It is integrated with the rest of your systems listed above.
The right payment gateway is crucial for any business, especially one that offers recurring billing. ECS Payments offers a choice between several payment gateways so merchants can choose which works best for their business needs. If you’re unsure about which payment gateway or merchant account to use with your recurring billing business, contact ECS Payments. Our experts can work with you to find the right recurring billing solution to help your business succeed.
Types of Recurring Billing Situations
There are a few different billing situations that can be considered recurring. Payment cycles can be monthly, quarterly, or annually. And customers can be automatically debited from either their credit card, debit card, or via ACH.
Credit and debit cards are typically the easiest to set up. However, there are some downsides to be aware of. Credit and debit cards can expire, get lost, stolen, or cancelled at any time. Additionally, a customer may only have a certain credit limit or funds available in their account which may restrict a business from completing the debit should that limit already be met. Credit card transactions are also more costly compared to debit or ACH.
ACH or Automated Clearing House payments work like electronic or eChecks, which are good for larger transactions. As mentioned, ACH transactions usually incur lower fees, especially for larger purchases compared to credit card transactions. Another benefit to ACH payments is that bank account numbers rarely change, therefore, it’s less likely that a debit will fail due to a cancelled account or expired information.
However, ACH payments generally have an extra step during the purchase workflow. The bank information needs to be verified, which is usually done via instant bank verification or IBV. IBV is a seamless process for the customer using a third-party app. But it only involves one extra step, and most customers are already familiar with this payment workflow.
Taking Advantage Of Your Existing Payment Gateway’s Features
There are many third-party services and apps to help with recurring billing, but as we’ve pointed out, these can be expensive, and you may not need them depending on your business. If you have a merchant account through a payment processor such as ECS Payments, then you already have access to a top-tier payment gateway. Most gateways have a suite of recurring billing tools that you can use immediately.
For example, Authorize.net and NMI are 2 of the payment gateways ECS Payments offers. These are great payment gateways for e-commerce businesses, especially those with recurring billing needs. When you log into your gateway, you can access all the recurring billing tools needed right from that interface. In this case, you will want to focus on two specific tools–the automatic recurring billing module (ARB) and the customer information manager (CIM).
Automatic Recurring Billing Module
You can set up automated billing from this dashboard by going to the ARB area. There are billing and invoicing options for the interval, such as monthly or annual. You can also offer free trials and other standard options for your customers.
Additionally, you can set up payment reminders here to alert customers of upcoming charges. You can also select from various invoice templates if you need to use invoicing for specific customers.
You can integrate this all directly with your website using the gateway’s API. To integrate the API, you must enter your API credentials into the software or shopping platform you use for your e-commerce website.
These credentials are created from the gateway’s dashboard within the API section. The gateway will make the credentials you enter into your website’s appropriate section.
Customer Information Manager
The other area that you may need for recurring billing is the customer information manager or CIM. This tool helps in two ways. For one, it stores your customers’ billing information for you. This means you can bill them regularly and have much less to worry about regarding security. Since your payment gateway holds all the information on its servers, you have far fewer security concerns.
There’s an additional tool many gateways offer–an automatic card updater. Automatic card updating helps to combat missed payments by checking the card information on file monthly. If the issuing bank of the customer’s card changes the expiration date or other information, your files are updated automatically. So, even if that customer received an updated credit card, you can continue to bill them uninterrupted.
More Information About Recurring Billing Integration
If you need help setting up recurring billing for your business, contact ECS Payment and speak with one of our payment processing experts.We offer merchants access to different gateways with tools built to help them manage their recurring billing and integrate them into their existing websites or operational software.
Contact ECS Payments today to learn more about recurring billing and how we can help you succeed using the latest innovative payment solutions.
