When you’re looking to increase recurrence in your business, one of the first things you should be doing is to set up automatic payments. There are several advantages in creating a payment automation strategy, especially in the beginning, as this can help your business have a steady income. In this article, we’re going to explore some great ways to start accepting automatic payments, the advantages of having this approach and hands-on tips on how to implement this approach.
What are automatic payments?
Automatic payments are simply a way to charge your customers’ payment method on a recurring basis, without manual intervention. A great example of the automatic payments approach is when you set up automatic payments for your phone bill with your credit card. With automatic payments, the phone company makes sure the user is being charged automatically every month.
Always remember your customers hate paying just as you hate collecting from them.
This prevents the user running into late payments and eventual service suspension. While automatic payments have been around several years ago, technology has brought this option to small business and startups. If you’re looking to set up automatic payments in your SMB, now it’s easy and has a far lower cost of implementation than several years ago.
The ingredients to set up automatic payments system
The first thing you need to start accepting payments online, of any kind, is set up an account with a payment gateway provider. Some of the most popular providers are Stripe and PayPal. Both have a great on-boarding experience and don’t charge any set-up fee for starting. While we personally love Stripe (here are some of the reasons), it’s not available everywhere. But if you are in the US, most of the EU and these countries, you’re in good luck. Still, PayPal is a great fit if your business is outside these countries.
Initial cost: $0
Per-transaction fee: 2.9% + $0.30 (In the US)
A second thing you have to consider, are development costs your automatic payment system. This type of software development can vary from $3.000 up to $10.000 depending on the complexity of the project. A more cost-effective solution would be our solution, PayForm. It enables you to create simple payment forms that include the option to set up an automatic payment contract (ex. a monthly payment or a yearly payment). You don’t require coding experience.
If you use Stripe, you can also add a variable fee to the invoice every month. For example, in the case of a digital marketing agency, you can set up automatic payments for a small retainer fee, and over this, use the Stripe Dashboard to add a variable marketing cost every month.
Initial cost: $0 (Free 7 days trial)
Subscription to the service: Starting $19/mo after trial
Per-transaction fee: $0 (regardless of volume)
This is it. You don’t need anything else to start. If you already have customers, it can be easy to convince them to enter an automatic payments agreement with you.
How to convert my customers to automatic payments?
You should be really communicative on the advantages they will have by not worrying about paying monthly. Explain the time they will save, and how it helps to avoid service disruption. This may sound hard at first, but you can start with your older customers first (who trust you the most). Always remember your customers hate paying just as you hate collecting from them. For this reason, explain the advantages of not having to worry about paying you manually. This is an approach that in the long term, will improve your retention and increase your value to your customers.
