What is Recurring Payment? How Does it Benefit Businesses?
A Recurring Payment is an automatic payment system that allows sellers to charge a buyer's credit or debit card regularly at predetermined intervals.
Recurring Payment is an automatic payment collection service gaining popularity among online merchants because it reduces the burden of chasing payments and increases customer convenience. However, it's undeniable that Recurring Payment is a new service format, so many people are still unfamiliar with how to use it and the application process. In this article, we'll help everyone understand Recurring Payment better. You'll finish reading knowing exactly what Recurring Payment is and what types of businesses it suits.
Table of Contents
• What is Recurring Payment? How is it important for online sellers?
• Which businesses are suitable for Recurring Payment services?
• What documents are required to apply for Recurring Payment?
• What are the pros and cons of Recurring Payment?
• KGP's Recurring Payment service makes payment collection more convenient.
• Recurring Payment is a convenient automatic payment collection service that modern businesses must use.
What is Recurring Payment? How is it important for online sellers?
Recurring Payment is an automatic payment collection service that allows sellers to charge a buyer's credit or debit card through automatic debit services. Payments are collected regularly on a predetermined schedule, which facilitates online transactions between buyers and sellers.
However, Recurring Payment is not an online installment system as many people understand. This is because Recurring Payment has no interest and no contract end date until the buyer cancels the service, unlike installment systems, which specify the number of installments and a clear due date. The contract ends only when the buyer has paid the full amount.
Which businesses are suitable for Recurring Payment services?
Recurring Payment is an online payment system that automatically debits money from buyers, making it suitable for online businesses that require regular payments, such as the following business types:
• Insurance Businesses: Policyholders must pay premiums to the insurance company every installment.
• Website Page Management Services: Website owners must pay maintenance fees as set by the service provider.
• Subscription-based Businesses: Supplement businesses, fitness centers, work software, online courses, news websites, etc.
• Businesses Related to Utilities: Such as telecommunications, electricity, water supply, which require monthly payments from consumers.
• Rental Businesses: Computer rental businesses, home rental businesses, car rental businesses.
As you can see, businesses offering continuous services are well-suited for Recurring Payment because it reduces the burden of constant manual payments. However, businesses with one-time transactions, such as real estate or car sales, would not benefit much from a Recurring Payment system due to their non-continuous transaction volume.
What documents are required to apply for Recurring Payment?
Before applying for Recurring Payment, it's essential to understand what documents are required to ensure correct preparation. The documents needed for Recurring Payment service applications are categorized as follows:
For Juristic Person Merchants
• Copy of bank account statements (Statement) for the past 4 months from the specified bank.
• Copy of the first page of the bank passbook from the specified bank.
• Copy of the company registration certificate (registered for at least 6 months and certified within the last 6 months).
• Copy of national ID card.
• Business license for special or specific businesses (if any).
For Individual Person Merchants
• Copy of bank account statements (Statement) for the past 4 months from the specified bank.
• Copy of national ID card.
• Copy of the first page of the bank passbook from the specified bank.
• Copy of commercial registration certificate.
• Business license for special or specific businesses (if any).
Additional documents for Online Merchants
• Screenshot of Website, Facebook, or online storefront.
• Agreement for maintaining funds in the bank account and consent letter for debiting deposits for debt payment.
• Copy of e-commerce registration certificate or document showing rights to use Hosting/Domain Name (if any).
What are the pros and cons of Recurring Payment?
Even though **Recurring Payment** is a service that facilitates both buyers and sellers, it also has limitations in its use. Understanding the advantages and limitations of this system will help us decide whether to use Recurring Payment appropriately.
Advantages
• Customer Retention: Businesses using Recurring Payment tend to retain customers long-term because customers can continuously use the business's services, reducing the likelihood of cancellations due to complicated payment processes.
• Accurate Revenue Forecasting: Recurring Payment helps online sellers know how much income they will receive per month from customers paying through the system, allowing for better financial planning and inventory management.
• Reduced Operating Costs: It helps reduce the cost of chasing payments because the system debits funds automatically.
Limitations
• Credit or Debit Card Required: Recurring Payment services require customers to use specified credit or debit cards. If a buyer doesn't have a card or doesn't want to link one, they cannot use the Recurring Payment service.
• Risk of Failed Debits: Although Recurring Payment automatically debits funds from customers' credit or debit cards, if the customer's card expires, is frozen, or has insufficient funds, the system will fail to debit, and payment may need to be made again.
KGP's Recurring Payment service makes payment collection more convenient.
As mentioned above, **Recurring Payment** is an automatic payment collection service that provides convenience to both buyers and sellers. For this reason, KGP has developed a Recurring Payment system that allows online sellers to set collection cycles as needed, supporting payments via credit cards, debit cards, OOD, and bank accounts from 3 leading institutions: KBank, KTB, and SCB. This reduces back-office workload and increases customer satisfaction. KGP's Recurring Payment service offers many advantages, as follows:
• Easy Management: KGP's Recurring Payment comes with user-friendly data management tools, allowing for efficient management of customer billing cycles.
• Reduced Burden of Chasing Payments: Hiring many employees to chase debts increases business costs. For SMEs, if costs increase, they cannot compete with larger businesses in the market. However, by implementing Recurring Payment, the system automatically debits payments, reducing the burden and costs associated with tracking payments.
• Increased Customer Convenience: On the due date, Recurring Payment automatically debits funds from the customer's credit or debit card, helping to prevent forgotten bills.
• Timely Payment for Sellers: After Recurring Payment debits funds from the customer's credit or debit card, the cash is immediately transferred to the seller's bank account linked to the system. This ensures timely receipt of funds.
Recurring Payment is a convenient automatic payment collection service that modern businesses must use.
Hopefully, everyone has now understood what **Recurring Payment** is and its importance. As you can see, Recurring Payment is a payment collection service that helps both buyers and sellers conduct financial transactions conveniently and quickly, creating a competitive advantage for your business.
If you're looking for a convenient and fast payment collection service, don't miss KGP's automatic debit service. You can set payment cycles according to customer needs at all levels. It also comes with a notification system before the payment due date, ensuring that funds are received on time, every bill, every installment.
KGP, Payment. Make It Smooth.
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