As a busy entrepreneur, one of your priorities should be finding ways to streamline your business processes while enhancing customer satisfaction. Whatever your industry might be, offering shoppers the ability to purchase goods and services with automated payments that go directly into your merchant accounts can help you to achieve this all-important goal.

Benefits of automated payments.

In recent years, offering recurring payments has become popular for all manner of sellers. The concept is simple: Make an arrangement in advance with the customer that specifies the set amount to be transferred, the account or credit card on which to draw, the frequency of the withdrawals (often weekly or monthly), and the duration of the agreement. Once this contract has been put in place, it can result in numerous advantages for buyer and seller alike. These include the following.

• Convenience. Neither party needs to remember to make a payment or bill for it; the fund transfer occurs without complications as long as the card or account remains active and the company’s bank account is in good standing.
• Predictability. The customer knows exactly when money will be taken out of their account. By the same token, the merchant can rely on a consistent in-flow of cash from prescription/recurring billing customers that can be used to pay bills, grow the business, or mount a new marketing campaign.
• Customer relationship enhancement. Today’s shoppers want to experience a rich connection that continues well beyond the actual purchase. When you arrange for automated payments, you have the added opportunity to communicate with patrons on a regular basis. Of course, this should involve information about billing and confirmation of received invoices, but it also gives you the chance to alert buyers to additional promotions or products targeted specifically to them. As a consequence, both you and the buyer can make the most of your relationship, leading to greater satisfaction and boosted profits.
• Fewer errors. With electronic funds transfers (EFT), the process is completely automated. This means there will be no data entry mistakes. Furthermore, you and your customer will be able to look back at the account to view all of the payment particulars if any questions or concerns arise.
• Minimal service or product interruptions. With payment automation in place, customers can count on receiving their items or services without fail since you will already be able to ensure that you have adequate inventory in stock to supply the merchandise. This leads to smoother dealings not only with recurring billing clients but with your suppliers and other vendors as well.

How to set up automated payments.

Setting up automated payments is a straightforward process with just a few easy steps.

• Choose your recurring payments software. The best way to do this is to speak with your payment service provider, who can describe the full range of options available to you and make recommendations to fit your individual business needs.
• Let potential customers know that you are now equipped to provide recurring billing. Although shoppers commonly associate this option with subscriptions, it also gives buyers a more affordable way to spread out the payments on high-ticket items. Display this along with the other payment methods you take on your website and near the checkout counter at your physical store.
• Set up the payment plan and schedule with your customer. Make sure that all details are clear, take time to answer any questions and send a complete description of the agreement to the customer via email for their records.
• Collect your funds. When your payment processing software detects that the time has come for a payment transfer, it will interact with the shopper’s bank or credit card company to withdraw the agreed-upon funds. It will also send an invoice to the customer confirming that the wire transfers have occurred.

Security and compliance.

Whenever you process any type of electronic payment, it is critical that you are in compliance with all payment regulations such as PCI DSS and NACHA. After all, these measures have been instituted to promote data security and reduce the likelihood of costly information leaks and breaches.

There are several things you can do to ensure that your recurring payments platform is in compliance with industry standards.

• Be sure that your payment processing provider and payment gateways adhere to PCI DSS and all other relevant standards.
• Keep a copy of the recurring payments authorization form that you and your customer created. This can be electronic, a hard copy, or even verbal. In the case of the first two options, be sure there is an electronic or physical signature. For verbal agreements, keep a voice recording on hand.
• Remain in regular communication with your customer, keeping in mind that they have control of the arrangement and should be able to make changes without difficulty if their situation warrants.

Automating invoices and billing payments.

Automated payments provide a seamless and predictable way for you to get the funds you are owed in a consistent and reliable manner. When you let your billing software do most of the work, you can focus more of your time on building your business and fostering top-shelf services and relationships with new and current customers. 

Additionally, payroll automation enables you to dispense checks to your employees without fuss or data entry errors. In many respects, money is the lifeblood that runs through your business. When it is circulating properly thanks to computer-driven processes, you can count on higher employee morale and more satisfied customers.

Best practices for automated payments.

There are several effective protocols that you can implement to promote and maintain the payment efficiency and regulatory compliance of your recurring billing infrastructure.

• Make data security a priority. Be in compliance with PCI DSS and other standards by choosing a payment gateway that uses tokenization, data encryption, and other payment security measures. Be sure that your support for automated payments providers is PCI compliant. Additionally, mitigate your fraud risk by using Address Verification System (AVS) and Card Value Verification (CVV) tools. These payment security measures help to confirm that the billing address and card security code match the data on file with the issuing bank.
• Get permission from customers when initiating the recurring billing arrangement. You should also obtain identity verification and keep the authorization and proof of signature in a safe place for easy retrieval if necessary.
• Be completely transparent when it comes to your payment policies. That includes subscription details, cancellation, returns, exchanges, refunds, and late fees. Prominently display anything you especially want customers to be aware of such as what to do when they need to update their account information.
• Effectively communicate payment policy changes. Inform customers via social media, email, in writing on billing statements, and on your website if you make any modifications to your payment scheduling protocols or payment amounts. Doing so well before these are reflected on their next bill will go a long way toward preventing chargebacks and will inspire greater customer loyalty.
• Avoid transaction declinations due to insufficient funds. If your payment software determines that your customer’s account does not contain enough money to make the payment, you won’t receive your money. To reduce the likelihood of this happening, configure your invoice automation software to send out a payment reminder 10 days before the due date. Taking this step is often enough to nudge the customer into having the necessary funds in their account when the withdrawal request is sent.
• Use Account Updater to ensure that credit card details are current. This system has been put in place by the credit card companies and allows you to have access to the customer’s new card details after they have been updated. As a result, the continuity of payments is preserved even if a card was lost or stolen and needed to be reissued with a new number.
• Use a dunning management system. If a payment fails to go through for whatever reason, this system makes several attempts to retry the transaction while also informing the customer of the difficulty. If the situation has not been resolved after these attempts, you can then get in touch with the buyer yourself in order to keep the recurring billing arrangement intact.
• Offer other payment methods. Allowing a customer to use their debit card for payment reconciliation results in fewer problems and a greater overall success rate.
• Avoid late fees whenever possible. Make sure that customers always receive advance notification of their upcoming payment due date. If you opt to charge fees for late payments, display them prominently on multiple channels. Entice buyers to send funds in advance by furnishing an early bird discount.

FAQs for automated payments.

Below are the two most often asked questions when it comes to automated payments.

How do I troubleshoot failed automated payments?

Payments can fail to go through for various reasons: expired card details, insufficient funds, or a bank refusal due to suspected fraud. The good news is that this does not necessarily mean that you have lost the customer. Take the following steps to increase your chances of retaining them and getting your money in a timely fashion.

• Don’t put off acting on the failed transaction. The longer you wait, the more likely you will lose the customer.
• Speak to your payment processor to learn what tools are at your disposal in your recurring payments software. These might include customer notification, renewal reminder, and retry payment features.
• Suspend the customer’s account until the situation is resolved.
• Notify the customer by email, either manually or via your billing software, that there is a problem with their payment. Encourage them to contact you directly so that you or your staff can walk them through the resolutions process.
• Include the nonpayment details in your email marketing software. This will allow you to send additional messages reminding the customer that the transaction failed, warning them about service cancellation, and even offering a discount should they choose to re-subscribe.

Are there any industry-specific regulations for automated payments?

There are a number of rules and regulations in the subscription industry that help to protect cardholder data as well as the merchants accepting the funds. These measures may be instituted by these different entities.

• Credit card companies and other financial institutions in the form of the Payment Card Industry Data Security Standard (PCI DSS).
• NACHA, a nonprofit organization concerned with transactions that are processed through the ACH network.
• Governmental agencies such as the Federal Reserve. Their Regulation E dictates how and when you can interact with a customer’s checking and savings accounts.
• California Consumer Privacy Act (CCPA in the U.S.) and General Data Protection Regulation (GDPR in the EU) are newer regulations designed to protect consumer privacy with guidelines pertaining to the storage, processing, and sharing of consumer data.
• Restore Online Shoppers Confidence Act (ROSCA). This law prevents two or more businesses from sharing the same consumer information without that person’s consent. It also requires that businesses provide easy ways for cancellation and stipulates that they disclose when recurring billing will occur.
• State laws. Because these vary according to jurisdiction and change frequently, it behooves business owners to remain vigilant about these rules to ensure that they remain aware of any new or modified legislation.