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How do I accept a recurring payment online as an SME?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

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Lily is a Senior Product Marketing Manager at GoCardless with expertise in open banking and new account-to-account payment capabilities. One of her main roles is to research and launch new product features and drive the adoption of those new features among GoCardless merchants. Prior to joining GoCardless Lily was a Product Marketing Manager at Wise (formerly TransferWise), attended Columbia University in the City of New York, and completed an MBA at the London Business School.ConnectSee full bio

Last editedFeb 20232 min read

If you offer a subscription service to your customers, it’s important to master the art of taking recurring payments. Although it may sound like a relatively simple piece of the payments puzzle, the ability to seamlessly accept recurring payments can have a significant impact on your business’s bottom line. So, how do I accept a recurring payment online as an SME? Find out everything you need to know with our simple guide.

Recurring payments explained

What does “recurring payment” mean? Essentially, recurring payments are automatic, repeating payments that have been authorised by the customer. They’re often used by subscription-based businesses that take payments from customers on a predetermined monthly basis, as well as businesses offering memberships or other services that require regular payments.

Why is it important to get recurring payments right?

When you’re running a subscription-based business, customer retention should be one of your key priorities. Because it’s significantly cheaper to retain an existing customer than it is to acquire a new one, you should try to do everything in your power to boost customer retention. Optimising your recurring payments process by making it as simple for the customer to make payment as possible can be an effective way to encourage your customers to stick around.

Of course, there are plenty of other benefits associated with recurring payments. Cash flow is a key issue. If you bill largely through recurring payments, you’ll have a much more predictable cash flow. This will help to improve your business’s financial planning, as you’ll have much more stable data to draw on. Furthermore, using a recurring billing solution means you’ll be able to automate billing. This reduces admin and keeps your expenses to a minimum.

At this point, you’re probably asking yourself one very simple question: “how do I accept a recurring payment online?” There are many different payment processing solutions that enable businesses to accept recurring payments online, from QuickBooks Payments and PayPal to Square and Stripe. Let’s look at one of the best options: GoCardless.

How GoCardless can help with recurring payments

GoCardless is a global bank pay network that allows you to collect one-off and recurring payments from your customers directly from their bank accounts. You can connect it to your existing payments software, use the online dashboard, or create an API integration, making it simple for SMEs to integrate with their existing payments infrastructure. Plus, with full automation, flexible timings, and low fees, it’s a great way to seamlessly manage payments.

Recurring card payment vs. Direct Debit

Recurring payments and Direct Debit are two of the most common methods of making regular payments, and while there are many similarities between the two, there are also a couple of important differences that you should pay attention to. Put simply, it’s all about where the money actually comes from. When you accept Direct Debit payments, you’re taking money directly from your customer’s bank account. When you accept recurring payments via card, on the other hand, you will experience higher payment failure rates due to lost and expired cards, as well as higher fees as a result of more intermediaries being involved in the payment process.

So, when it comes to recurring card payments vs. Direct Debit, there’s a clear difference. Because Direct Debit helps you to avoid the risk of involuntary churn associated with cancelled or expired cards – since the money is being drawn directly from the customer’s bank account – it’s usually viewed as the more attractive option for businesses. In addition, because Direct Debit payments don’t need to be routed through the UK’s card networks, which tend to be relatively expensive, they’re more affordable.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.