Are you struggling with manual payment processing?
If you’re a bank or credit union with customers with diverse payment needs, methods, and schedules, managing regular payments can be a never-ending task. Moreover, the growing demands on your institution can quickly become overwhelming and nerve-wracking.
Convenience and automation, therefore, become necessary in the banking industry. And this is where recurring payments enter.
In this comprehensive guide, we will explore the concept of recurring payments, its benefits, and how to integrate it into existing models to streamline their payment operations.
Let’s get started.
Recurring payments automate the process of regular financial transactions by authorizing the bank to withdraw funds from a customer’s account on a specified schedule.
Such payments benefit both customers and financial institutions by allowing customers to use different payment methods like ACH processing, credit cards, debit cards, or SMS payments without having to set constant reminders and enabling banks to accommodate various types of recurring payment schedules, such as fixed and variable amounts or specific dates.
Many banking institutions’ day-to-day tasks revolve around collecting payments from their regular customers. Therefore, automating the process via recurring payments impacts banking institutions on several levels. Here are some benefits of recurring payments that small banks and credit unions can enjoy:
Recurring payment services enable banks and unions to offer a convenient and seamless payment experience, which can improve customer satisfaction and loyalty to build stronger relationships with customers. Customers who regularly use recurring payments are more likely to stay with a bank or credit union over the long term.
As mentioned above, convenience and seamless experience prompt customers to stay with a bank or credit union for a longer term. Moreover, when customers have their recurring bills set up with a financial institution, they are less likely to switch to a competitor. The stability in customer relationships becomes a valuable asset for small institutions who wish to grow their customer base.
Recurring payments provide a predictable and steady source of revenue for small banks and credit unions. By facilitating automated recurring transactions, banks and credit unions can rely on regular inflows of funds, which can help with financial planning, budgeting, and business expansion. 39% of consumers pay their monthly bills on time through automatic payments.
Automating the payment process eliminates manual intervention, paperwork, and administrative tasks involved with payment processing, minimizing the expense. This frees staff to focus on other critical customer service areas and value-added activities.
Small banks and credit unions enjoy a competitive edge in the market as they can differentiate themselves from competitors and attract customers who value the convenience and efficiency of recurring payments.
Now that we have explained the benefits and impact of implementing recurring payments into workflow let’s explore how to implement it without getting “Payment Blues.”
When implementing recurring payment solutions into your payment processing system, it’s essential to carefully plan and consider several factors before choosing the right operator. Consider the following while researching:
Pro tip: Opt for Nacha preferred solution providers.
Connect with the narrowed-down list of providers to discuss their offerings, payment methods, customer support, subscriptions, and hidden fees. Take advantage of the first offer. Negotiate your way in to find a mutually-beneficial deal.
Let your third-party solution provider integrate the model into your application or website. Define your subscription plans and pricing structures. Determine each plan's frequency (e.g., monthly, yearly) and billing amount.
Pro tip: Consider offering different tiers or options to accommodate customer preferences.
Ensure that the third-party solution provider sets up systems to handle failed payments due to reasons like expired credit cards or insufficient funds. Set up processes to notify customers about failed payments and prompt customers to update their payment information.
Thoroughly test your recurring payment system in a staging or development environment before deploying it to production. Perform end-to-end testing to ensure proper functionality, handle edge cases, and verify integration with the payment gateway.
Continuously monitor the performance of your recurring payment system, gather customer feedback, and make improvements based on user experience and business needs.
All your investment will amount to zero if your customers do not adopt it, so optimizing the changes to enhance customer experience and satisfaction becomes integral to setting up recurring payment solutions:
Mashreq Bank, a leading acquiring bank in the United Arab Emirates, aimed to tap into the growing e-commerce potential. Still, doing so at scale with an increasing customer base and traditional payment processing took a lot of work.
To stay ahead of the curve, Mashreq Bank partnered with Mastercard Payment Gateway Services to integrate its reliable and secure white-label payment gateway, enabling the bank to offer its merchants fast, innovative, and highly secure recurring payment options. This strategic move allowed Mashreq Bank to witness a remarkable 126% year-on-year increase in transactions processed through its gateway in 2019 alone. They also contributed to the UAE government’s vision of cashless transactions by 2021.
While you can wait for your customers to adapt to the change, an intelligent approach is to encourage your users with subtle marketing practices. Using different marketing channels like social media, emails, SMS, and referral programs, you can improve adoption at a fast pace.
The payment processing landscape is continuously evolving with developing artificial intelligence, technological advancements, and changing customer preferences. We expect a few of these trends to emerge:
We hope this guide provides a clear insight into recurring payments, helping small banks and credit unions build a future-proof payment processing system. By understanding, implementing robust solutions, and staying attuned to future trends, these institutions can enhance operational efficiency and customer experience.
Do you have any questions, or are you ready to start your recurring payment journey? Reach out to one of the experts at iCheckGateway.com.