What is a Recurring Transaction?

What are Recurring Payments? How to Accept Recurring Payments.

Most commonly, recurring payments are automated transactions that take effect on a preset date upon making a subscription. Other predominant instances where recurring payments are used include: memberships, utility bills, online lessons, and so on. Most imminently, since they're repeated transactions, they work on a prior set schedule as dictated by a customer.

As the diverse business models gear up to thrive globally, so is the need to ease the billing process. Recurring payments make it convenient for both merchants and customers to do business. As a startup, making your business have returning customers who pay for your goods or services consistently is quite daunting.

The truth of the matter is, recurring payments are quite inevitable within the scope of merchant services. As a consumer, you must be guilty of authorizing recurring payments at some point in time.

Let’s use an illustration to get a glimpse of what I'm trying to suggest.

Trendsetting streaming services such as Netflix, Amazon Prime, HBO, and Spotify make it quite feasible for customers to pay for their monthly plans. In the same manner, software companies allow recurring companies anytime your package expires. This subscription-based model is staggeringly taking center stage.

How Recurring Payments Work

Getting hold of all the transactions in whatever business or subscription you have in your bills is never a demanding process. For merchants though, the catch is you ought to obtain a requisite authorization from your customers.

With ACH payments, in particular, the security measures are so stringent and the same goes for all notable payment processors.

Once you sync your card details, the processor requests for recurring payments on the same transactions. If you've used apps like PayPal, Square or Stripe you really understand what I mean.

Spoiler alert!

So just you know, we'll look into these payment processors comprehensively in this guide and see how each handles recurring payments. To put it in context, you need an all-inclusive solution to accept recurring payments precisely if you're a merchant. Since it's sort of an automated process, the processor runs all your errands in an effortless way.

Suppose you want to bill your customers periodically, say, on a monthly basis, a payment processor is designed to invoice your clients as per the respective scheduled due dates.

But before you just jump right into any popular processor haphazardly, it's prudent to analyze what your dire business needs are. As of now, each solution in the market has some expertise tools to get your transactions on the right track.

Invoice Oriented Recurring Payments

This mode is automated in the same manner as other mainstream payment channels. With the invoice-based technique, the system debits a customer's debit or credit card once the authorization request is successfully processed. As simple as it sounds. This isn't anything close to quantum physics, so to speak.

Not all processors are sturdy enough to support this kind of transaction though. Those which do, provide an impeccable solution by saving your customers' first invoice information for future payments.

So long as the preceding transactions mature successfully, all subsequent ones are a no brainer. What the processor does, is to automatically approve all new invoices. Customarily, when an invoice is paid, the system updates the status as ‘settled' or ‘paid'. This systematically reflects on all your reports(both merchants and customers).

So who should use the invoice-based recurring payments? Let's have a look.

  • Subscription service providers- By this, I mean streaming services, as earlier mentioned, online magazines, and Saas services such as Magneto, Shopify, or even WordPress’ very own WooCommerce.
  • Membership services- There’s usually a string of recurring payments from memberships, particularly, in business models such as gym and fitness setups, sports clubs, just to name a few.
  • Financial servicesOn this account, it’s constructive to say that your savings and retirement schemes like the familiar 401K plan will definitely fall under this category. Another typical case is loan repayment where this solution helps you avoid defaulting on your financial priorities.

How about recurring payments for online businesses?

Well, you must realize that recurring charges are quite pre-eminent here. It goes without question that there are equally a good fraction of online membership services at the moment.

And here’s a practical scenario.

So if let’s say you make an online software purchase or rather sign up for a social club membership plan, that’s where an online recurring payment takes effect to run all your subsequent payments, without fail.

How Much Does it Cost to Make Recurring Payments?

Basically, nearly everything worthwhile and convenient comes with a price. You must be very much privy to that. And so are the recurring payments processors. Anyway, it’s not that much. Going by factual details, the processing fees for each recurring payment is usually a tiny percentage of the whole transaction amount.

Most of these processers will need you to part with anything between 1.5 to 3.5%, thereabout and some cents on top of that. As things stand, a processor like Square allows you to handle all your transactions without charging any monthly fees.

Other payment solutions that work in the same fashion are Stripe and the accounting guru, Quickbooks payments. You only need to sort out the transaction fees and you're good to go.

Contrastingly, other payment processors sort of deviate from this formula in a noticeable way. Take PayPal, as our case in point. This stunning merchant account provider has lower rates as compared to the above-listed tools but the catch is, it comes with a monthly fee.

So which one should you go with? Before anything else, you need to do some quick math and figure out which payment model is a bit lenient on your business’ expenses. Of course, this highly depends on whether yours is a setup which is more inclined to the invoice-based or online business-related, accordingly.

What’s more decisive and crucial, are the perks or in other words, the viable benefits that each recurring payment solution is ready to put on the table. For that reason, we need to make in-depth scrutiny of some of the mainstream Recurring Payment solutions and see how each contrasts to its competitor, respectively.

 

Leading Recurring Payment Processors in 2019

I need you to think of this part as a refined blueprint or if you like, a directory of what you need to know as regards to the best and most preferable payment processors in the market. At the end of this detailed analysis, you’ll grasp how each matches up with your distinctive needs.

Whether you’re a business or a customer, here’s a total breakdown of the processing fees and any extras for each recurring payment in a bid to quicken your transactions.

Payline Data: Recurring Payments Solution

To a large extent, Payline seems like a reputable alternative that markets itself as a level-headed payment processor for all your recurring bills. If, for instance, you run an ecommerce subscription business,

I'd advise you to try Payline Data out.

And here are my grounds:

Payline has a unique subscription billing model for merchants to hang on. With this on board, your online card processing tasks will definitely meet no boundaries whatsoever. At the same time, this gateway gives you space to leverage off of three different recurring billing options which are;

  • Traditional channel– This is a solid solution that is pretty much in a class by itself. If you choose to use this option, you get to set up automatic recurring billing for a single cardholder via normal credit card processing or the ACH payments method. Payline saves all preset dates for billing purposes.
  • Expanded– Otherwise known as the Plan Recurring Billing plan, this solution automates the timings or rather intervals for future repeated payments and convert the plan a specified dollar amount. Unlike the former channel, this option allows you to create a recurring payment plan for an unlimited number of cardholders, simultaneously.
  • Modifiable– This is more of an action-packed solution that lets its users make perfect use of its bulk processing technique that authenticates about 50000 transactions in just 90 minutes. Practically speaking, you can easily import such information either via a CSV or TXT file.

If you’re a merchant who’s at an enterprise level, the Modifiable option is the only solution you’ll need for your prospective transactions. As the name suggests, this plan allows you to make all sorts of adjustments that you need to work with. To illustrate further, the gateway stores your spreadsheet template with all subsequent pending transactions and executes the same in a batch.

Payline Pricing

Since this recurring payment processor spreads across so many industries; subscription-based, merchant services and more, it has a customizable pricing model for its users. While there are no cancellation fees, Payline preserves its policy as a PCI compliant processor.

Well, it’s clear that your monthly costs majorly depend on the average transactions, the cumulative processing volume, and your mode of accepting credit cards from customers. If that sounds a bit blurry, you can just hang on Payline’s online calculator to come out accurate with your monthly processing charges.

The best part with this Merchant account provider is that it evens out the odds by charging an interchange fee across big credit cards such a Visa, Discover, and Mastercard.

For now, here’s what a merchant needs to know in a nutshell.

If customers swipe their credit cards in person, Payline charges 0.2% or $0.10 per transaction. Where there’s no physical card to swipe, you’ll only part with 0.3% for the entire transaction.

  • Baseline Plan– As another option, you can pay $10 a month plus $25 for the chargeback fee(check out the perks which come with this plan).
  • Payline Connect Plan-As the name goes, it hooks merchants with the most viable channel for e-commerce transactions. Its interchange price is 0.3% plus 20 cents. Also, you need to sort out the $20 monthly fee and $25 for the chargebacks as well.
  • Payline Medical Plan- This is the most recent package. It’s suitably designed for healthcare providers. Payline charges per your interchange price at a rate of 0.30 % plus 10 cents per transaction.

If you manage recurring ACH payments, this processor only asks for 4% of the entire transactions. The bright side is that there are no monthly charges. Sometimes, ACH payments might get a bit bewildering for most merchants. For this reason, Payline gives its clients professional account support so as to clear out any future or already existing mishaps.

Payline Recurring Payments: Main Benefits

So why should I be head over heels for Payline? That’s a pretty straightforward question any merchant would ask. Primarily, this solution elevates the security status on all of its transactions and allows you to scale further whenever your business makes big strides towards a larger subscription list; if, for example, it runs on such a model.

Second, to the above, are its instantaneous integrations with powerful apps that lead all merchants to their projected goals. So what if I'm an online merchant, how do I integrate it with my store’s shopping cart.

Let me give you an executive summary of what exactly this recurring payment processor syncs with.

In absence of any daunting efforts, Payline integrates with sales channels such as Volusion, Shopify, WooCommerce, Intuit Quickbooks, 3dcart, PrestaShop, Magneto, and the list goes on.

To sing a more clear tune about its functionalities, I must give so much credit to its virtual terminal. It’s so proficient and helps out with with the daily routine schedule for almost all merchants in diverse niches. As anticipated by any potential user, Payline’s virtual terminal gives you access to its invoicing recurring service which has descriptive billing options to choose from. As a result, you get to create a smooth plan for all the scheduled payments.

Square Recurring Payments

You must know that Square is an eminent boss with a lion’s share in the merchant account processing industry. Since I don’t want to sound redundant by praising it with what you might be conscious of, I’ll straight away go with what’s related to today’s subject matter.

How Square handles Recurring Payments

Square, being a remarkable, cloud-based or locally installed POS system, it shouldn't strike you by surprise that it can brilliantly handle all your credit card transactions and correspondingly, manage any sort of industrial-level recurring payments. I'm impressed by Square's setup guide which shows new users on how to configure recurring payments.

For security reasons, Square lawfully abides by all the PCI rules. Be in the know and rest assured that your customer’s credit card information is constantly in safe hands. If the merchant bills a client via invoice, Square’s system pushes a link notification that has the requisite information form to the customer.

The data is securely stored on a Card on File(CoF). It’s the brains behind the Invoice initiated transactions. This process runs in real-time and auto-generates reports which are sent to customers as proof of all your ‘paid’ invoices. For those who own an In-store, you can help your customers out at the convenience of your POS system or mobile dashboard.

So let’s cut the chase. Here’s why you need to deeply consider the magnificent Square as your feature-rich recurring payment provider;

  • Square has captivating invoice-based criteria for all business setups.
  • The dashboard is beginner-friendly, I must coincide.
  • There are absolutely no monthly fees or any extras($0).
  • It accepts payments from all major credit and debit cards in the market. This includes eWallet transactions.
  • The Recurring Payment Processing Fee is fairly low. 3.5% +10¢, to be precise.

But here’s the sickening snag.

It’s quite unfortunate that Square isn’t the right tool to deal with ACH or PayPal payments.

Square’s Pricing Per Type of Sale Transaction

  • Merchant Account fees- Zero
  • Automated Recurring Payments- 3.5% plus 15 cents per transaction.
  • Invoice-Initiated Recurring Payments2.9% plus 30 cents for each transaction.
  • Virtual In-person & Brick and Mortar store sales- 2.75% per sales transaction.

Putting into consideration what other processors on this list charge, it’s clearly expressed that Square’s pricing is slightly overboard. On the other side of the picture, Square is hands down, an indefectible recurring payments processor for merchants who run a Bricks and Clicks business model.

Square Recurring Payments: Bottomline

If you’re at the realm of looking for an online recurring payment processor, Square, equally as other conventional solutions, might be what you really need to prevail in future recurring transactions. It has a smooth learning curve and a solid customer relationship management(CRM) base.

If you’re new to Square’s dashboard, the pleasing news that you’ll not need to bungee jump pointlessly while setting everything up. This processor engages with its users in a systematic and efficient manner.

Same as other insightful payments tools, Square uses the invoice-based approach to send recurring bills to your customers, subject to the interchange rates. If there are any additional expenses that need to be attached alongside the invoice, Square gives space to either bill the client as a separate transaction or to include the same on preset recurring costs.

Depending on what your priorities are, you have two options to play around with. Aside from recurring transactions, Square has a skillful infrastructure for merchants whose interest is more focused on storefronts. It’s a handy solution for online stores that deal with mobile transactions. Unlike other recurring payments, Square charges less processing fees for other major actions.

If you run any sort of retail business, whether small or huge, Square’s POS system acts right on all your demanding tasks. It updates you with daily sales reports, allows you to automatically import and sync your inventory with the mobile point of sale. If you run a mid-range business setup, Square it the most practiced and crackerjack system you need for your recurring bills settlement.

PayPal Recurring Payments

 

We have to admit that PayPal outrightly plays like an elite payment processor in so many ways. Being a merchant account service payment provider on e-commerce giants like Amazon, e-Bay, and the most recent one, Alibaba, PayPal shows the same might with recurring payments too.

It has so much to give than take from online business merchants. So what’s the deal with this tool? You might be wondering.

Well, let me give you a brief overview:

  • This solution is invoice-focused to help both online and in-store businesses manage transactions.
  • Monthly Fees– PayPal charges $30 for the virtual terminal plus
  • Recurring Bills Processing Fee 2.9% + 30 cents per transaction.
  • Payment Types– Paypal payments, credit or debit card transactions, and eWallet services.
  • PayPal uses advanced fraud protection technology

As of now, PayPal doesn't guarantee exclusive security and a stable platform for ACH initiated payments and electronic checks.

PayPal Business Pricing Model

  • In-person Virtual & In-store payments- 2.7% for each transaction.
  • Online stores and Website subscriptions2.9% + 30 cents per transaction.
  • Automated Recurring Payments2.9% + 30 cents per transaction.
  • Virtual Terminal Fees$30 per month.
  • Invoicing$0 per month
  • Authorized Recurring Payments extension- $10 each month.

PayPal charges a monthly fee ($30) since the merchant needs to either have a virtual portal or upgrade to the Payments pro plan. The latter costs the same as having a virtual terminal.

If you happen to be in the e-commerce bandwagon, PayPal offers competitive rates and quite meaningful perks to tag along on your online store. It seamlessly integrates with popular 3rd party shopping carts like Salesforce, Wix, Shopify, WooCommmece, and BigCommerce.

In addition, it syncs with accounting tools like Quickbooks and Xero. In all exactness, you can certainly never go wrong with PayPal’s online invoicing system. Not forgetting that it has lower recurring transaction fees as compared to its counterpart, Square.

How PayPal runs your Recurring Payments.

In a fulfilling way, PayPal’s support system proactively guides all potential users on how to utilize its recurring payments services. That aside, it has exhaustive tutorials that guide you on how to make the best out of its perfectly synchronized e-commerce checkout options.

To complete the recurring payments configurations, you just need to;

  1. Set the recurring payment amount. You can execute this action right from your dashboard where you can still build the ‘Subscribe’ option for your customers to checkout from.
  2. Attach the ‘Subscription’ button to your products’ landing pages and other marketing channels.
  3. While the customers subscribe by completing the checkout process, PayPal stores the recurring payments schedule as per the pre-set intervals(i.e. monthly).
  4. Paypal will, later on, invoice each customer with the respective amount to be paid.

PayPal Recurring Payments: Final Words

As regards to recurring payments, PayPal creates a logical possibility for customers to use their personal personal accounts whenever they need to pay for merchant services via credit or debit cards.

Moreover, PayPal has garnered its popularity for being one of the most desired payment services for many online customers.

Stripe Recurring Billing

stripe recurring payments

Stripe is an aggressive competitor which has the prowess to race up against a brawny tool such as PayPal. Just like the latter, it’s a highly regarded recurring payments processor that handles online invoicing, subscription-based transactions, and all sorts of online membership services.

Have a look at its flexible features;

  • Unlike the PayPal processors, Stripe accepts ACH payments and electronic checks.
  • Payments types– Allows recurring transactions from customers’ credit and debit card payments. Accepts eWallet services too.
  • It supports invoice-based transactions and issues sales-receipts services.
  • Ideal for online businesses that offer subscription- oriented services and those that sell online memberships.

Stripe Recurring Payments: Pricing

  • Monthly Fees – $0
  • Automatic Recurring Transactions2.9% + 30 cents per transaction
  • Online store & Websites’ subscriptions2.9% + 30 cents per transaction.

Going by these figures, it’s beyond any skepticism that Stripe charges way less than most of its rivals including PayPal. Even without any monthly charges in place, the processor still manages its recurring payments services in a conclusive manner.

The downside is that if you’re an online merchant, you’ll need to part ways with major PayPal payments since Stripe doesn’t support that at the moment.

How Stripe Recurring Payments Works

In plain English terms, Stripe seems like a fitting solution that integrates with e-commerce sales channels to maintain a significant customer authentication process while handling bulk recurring payments.

As a matter of fact, WooCommerce is among the solutions which strongly recommend Stripe as the most resolute checkout option. Its automated integration with multiple online stores allows the merchants to collect subscription payments and send invoices at the push of a button.

It’s pretty facile to include a pop-up subscription or membership button using Stripe. Many thanks to its integrations which are up to the task. With this feature, you can make adjustments to your website’s landing pages to gain more from potential visitors.

As a rule of thumb, Stipe is solemnly a PCI compliant processor. So you don’t need to worry about security breach issues. Your customer’s credit card information is securely stored on Stripe’s virtual vault.

Once a recurring transaction takes effect successfully as per the payment schedule, a real-time notification is sent to the customer via email.

Stripe Recurring Payments: Is This Alternative Beneficial?

To both the merchant and customers, it’s evidently a proficient recurring payment processor. First off, it has no monthly charges, unlike PayPal where you have to pay $40 each month. Closely connected to that, Stripe connects to other online payment processors including PayPal.

Stripe is, however, clueless about retail POS systems. That’s the draining part about it.

Intuit Quickbooks Recurring Payments

intuit quickbooks

I know you must have heard about this picture-perfect accounting tool. Surprisingly, Quickbooks is also a ripped multitasker. It handles recurring payments fairly well just like the above-mentioned processors.

So let’s have a look at the basics;

  • Has an invoice-based and sales receipt infrastructure
  • Flexible monthly plans depending on your needs
  • Accepts credit and debit cards, ACH payments, and e-check transactions.
  • Recurring Payments Processing Fees depends on your preferred plan

Intuit Quickbooks Recurring Payments: Pricing

As noted above, the pricing structure on Quickbooks strictly depends on the kind of plan you want to go with. Currently, merchants can either use the mobile or desktop version of the software.

The first plan, in particular, doesn’t have a monthly fee but has higher fees. So let's see the rates for each;

Quickbooks Online

  • Automated Recurring Payments Processing Fees3.1% + 25 ¢ for the 1st plan & 2.9% + 25 ¢ for the 2nd plan.
  • Online Invoice Transactions2.9% + 25¢ for the 1st plan and 2.75 +25¢ for the 2nd plan.
  • ACH Payments- Free on both plans
  • Monthly Charges Free on the 1st Plan and $16 for the 2nd plan.

Quickbooks Desktop Option

  • Automated Recurring Payments Processing Fees3.1% + 25¢ for Plan 1 & 2.9% + 25¢ for Plan 2.
  • Online Invoice Transactions3.1% + 25¢ for Plan 1 & 2.9% + 25¢ for Plan 2
  • In-Person Transactions2.2% + 25¢ for the 1st Plan and 1.5% + 25¢ for the 2nd Plan.
  • ACH and eCheck payments- $1 on both plans
  • Monthly Fees $0 on the 1st Plan and $16 for the 2nd plan.

My quick tip?

I’d suggest that you sort of do some economies of scale and see which plan is perfect for your business setup. This will precisely help you know which package charges less processing fees.

How Quickbooks Runs Your Operations

It has a secure vault, just like its counterparts. By a simple click of a button, Quickbooks sends invoices and sales receipts to all your subscribed customers at the exact scheduled time.

If you’re a newbie to this payment processor, you can make its setup guide your companion and get things done in an expedient manner. Furthermore, Quickbooks has a ‘make recurring’ option. All you need to do is click the button. Nothing much. Since your customer needs to approve the recurring debits, Quickbooks generates a resourceful authorization form to be filled by the client.

Quickbooks Recurring Payments: What’s The Considerable Benefit?

By virtue of being a popular accounting software, it’s pretty obvious that Quickbooks will sort your payments in a businesslike way. Not forgetting the fact that it absolutely integrates with nearly all e-commerce sales channels.

Winding Up

Everything considered it’s prudent to identify what your business interests are before choosing a recurring payment processor. If none of these feels like the perfect fit for your enterprise, you can check out other players such as Chargebee and PaySimple.They’re equally good with recurring transactions.

These tools are convenient for both startups and businesses that need to scale. Each has a diverse pricing model for tasks like sending invoices, recurring transactions such as memberships, subscription sales and much more. All you need to do is figure out where your needs as a merchant stand. As easy as that.

 

Become an ecommerce expert

Enter your email to get the party started