If your customers need to pay you on a regular basis, setting up a recurring payment plan will enable you to collect these payments automatically – as well as improving both yours and your customers’ cashflow.
Although direct debit is the most well-known and trusted method for businesses of all shapes and sizes, there might be certain circumstances where recurring payments is the preferred option.
To help you decide whether to choose a direct debit scheme or a recurring payment plan, we answer a number of frequently asked questions.
How does the process work?
Setting up recurring payments gives your business the flexibility to create as many different subscription plans as you need. This allows you to customise the intervals when your customers are charged. This could be weekly, monthly or annually. There are also different pricing tiers available to meet the needs of your customers and your business.
How much does it cost?
It is vital that you look at how much it will cost your business before you choose a recurring payment provider. When comparing the costs of different providers, you should consider the setup costs, the transaction costs and the administration costs. Only when you’ve weighed up the cost of all three will you be able to make a fair comparison.
Will it increase sales?
Being able to accept payments on your own website can play a key role in increasing the number of visits being converted into sales.
Pointing customers to another website to make a card payment can often lose you the sale as they will want their transactions to be as hassle free. It not only makes the payment process longer and slower, but it also raises more questions in their minds about payment security.
Having a payment page or having the facility to take payments directly on your website can have a positive influence on your sales figures. To accept onsite payments, you will require an SSL certificate and compliance with certain legal and technical requirements.
How fast is it?
The length of time it takes for funds to clear will depend on the payment type and the provider. Direct debit payments may take slightly longer to clear, so if you want to ship goods as soon as payment has been confirmed, credit card payments could provide the shorter turnaround times you need.
Please note, however, that card payments are not protected by the Direct Debit Guarantee, so if an error is made, it can be more difficult for your customers to reclaim any payments taken by mistake. With direct debit, your customers will have the peace of mind that they will be able to get a full and immediate refund.
What support is needed?
You need a provider who can offer some form of email or telephone support for assistance when dealing with chargebacks or in the case of disputes. If you are planning to collect payments from outside the UK, you should also look for a provider that operates internationally and can accept payments in a variety of currencies.
Which is best?
There are some very important things to consider before choosing between a direct debit or a recurring payment plan. For example, it can be difficult to cancel a recurring card payment, whereas direct debit gives customers the right to cancel at any time, which can play an important role in their purchasing decision.
There’s a good reason why direct debit is the UK’s most popular method of collecting regular payments. It gives a level of security and safeguards that recurring card payments cannot. At TaxAssist Accountants, client confidence is paramount, therefore direct debit is the preferred option in most instances.
Want to know more?
A lot of businesses are interested in using a direct debit to collect payments but many banks say they are too small to be adopt this method. However, by working with London & Zurich, TaxAssist Accountants has been able to negotiate a special arrangement and can offer it to you in a very cost effective way.
Call London & Zurich for more information about its direct debit services on 0121 234 7999.
By Jo Nockels
Last updated August 2016