Recurring payments have been a boon for both payers and receivers. Numerous benefits are associated with recurring payments, which is why the popularity of recurring payment apps has been increasing consistently. One key reason could be the popularity of subscription-based business models in various sectors.
However, it is critical to understand and overcome various challenges that both parties (users and businesses) could face in managing recurring payments. This is why dedicated and specialized recurring payment apps have become quite popular, as they are designed to overcome the most common challenges in payment management. There are several apps for efficiently managing recurring subscriptions that can help provide a swifter and effortless experience. Here is a guide that will help a reader understand how to overcome some major challenges in recurring payment management.
Understanding Recurring Payments
Before discussing the challenges and ways to overcome them, the first step is to understand the concept of recurring payments. In other words, recurring payments could be deemed the cornerstone of modern financial transactions. This system allows for deducting a specific amount from the customer’s bank or credit card at a pre-decided date.
The role of the latest technology in recurring payment apps ensures that customers do not miss out on payments, and hence, their services remain uninterrupted. Further, the chances of any late fees or penalties imposed by the service provider due to late or non-payment of the service fee are also eliminated from the scene. From a business perspective, it provides an excellent chance to evaluate upcoming earnings as the organization has better visibility of the cash flows.
What are the Challenges in Recurring Payment Management
As mentioned in the previous section, there are numerous benefits that the concept of recurring payments can provide to customers as well as businesses. However, there are a few challenges that affect the system’s swiftness. Some of the most common challenges are discussed here:
- Difficulty in Tracking Multiple Subscriptions: The number of subscription-based services (and even subscription-based products) has increased. As per Statista, the conversion rate of consumer goods subscriptions (ecommerce) has increased to 34.3%, which is expected to rise even further.
However, there are various instances where an individual ends up subscribing to multiple platforms and ecommerce sellers. One of the biggest challenges here is to keep track of all the products and services to which a customer is subscribed, which is quite time-consuming.
- Failure to Update Payment Information: There can be different reasons for changes in the payment information. For example, if a customer has lost a credit card and is issued a new one as a replacement, it is critical to update the payment information with the service provider. There can be various other reasons for the change in payment information (bank closure, new credit card, etc.). Such information should be promptly updated to ensure that a person receives uninterrupted services.
- Dealing with Delays and Payment Failures: Despite the inbuilt feature of deducting money at a specific date, there are chances of delays and payment failures. For instance, if the credit card limit has expired or the bank account does not have sufficient funds, there would inadvertently be delays or failures in processing payments. There can be other factors, such as technical failures, that can cause such issues. For an overall flawless experience, instances must be planned.
- The Complexity of Staying Organized: The service provider has an administrative overhead in keeping track of all the records and transactions. There is a need for a proper customer support system, as recurring payments can bring multiple inquiries or issues from customers. Hence, for a business, it could easily lead to operational inefficiencies.
- The Implications of Financial Mismanagement: From the perspective of customers and businesses, financial mismanagement can lead to penalties and loss of money. It also wastes a significant amount of time.
The Role of Technology and Apps in Overcoming Challenges
To overcome the challenges discussed in the previous section, the role of technology used by some apps for efficiently managing recurring subscriptions cannot be ignored. Here are some of the ways by which these challenges can be dealt with:
- Providing Notification Alerts: Apps send notifications before renewal or payment is due. This means that a user has the option of canceling any subscription in advance.
- Seamless and Integrated Subscription Tracking: There are centralized and integration functionalities through which all the details related to subscriptions, such as start dates, renewal dates, and monthly costs, can be monitored at all times. This means that a user has better control over spending and financial management.
- Spending Analytics: Advanced applications provide deeper insights concerning different areas in which money is spent every month. This means that a user can evaluate where they are overspending and hence could make more informed decisions.
- Direct Subscription Management: The ability to make changes to the subscription or cancel it directly from the app provides a significant level of power in the hands of the users.
- Automated Updates and Payments Processing: Some apps have the functionality of automated updates (especially when a new card is issued) in case of a change in the credit card or any other payment module. Further, a payment is automatically reprocessed after a given period in case of a default.
You might have to approach SaaS development companies to develop recurring payment solutions.
Summing Up
To conclude, the rise of subscription-based business models is a long-term phenomenon and this trend is expected to continue and disrupt different sectors and industries in the future as well. In such a case, recurring payments must be promoted and managed most effectively. The article talked about the most critical challenges that could be associated with recurring payment management. However, the answer lies in technology and its ability to be proactive. Applications make the best use of these technologies and ensure that such challenges do not affect users.
