The History of Automated Payments and its Future Prospects
Payment systems have witnessed accelerated growth in the past few years. Automated payments specifically are gaining popularity among businesses and consumers due to their ease of use and convenience.
What is an Automated Payment?
Automated payment is a payment that is directly sent to one of your billers from your bank account or credit card. With digitization and automation of the payment system, businesses can reduce the cost of processing the invoices by 50% and boost the average time to collect payment by 62%.
In this article, we'll understand how automated payments evolved, their prospects, and what it means for small businesses like yours.
Until a few years ago, you had to do the following for making recurring payments to a third party:
- Visiting your nearby bank branch
- Giving direct debit standing instructions to the bank
- Filling out the required forms, specifying information like the beneficiary name, account number to be credited, and frequency of payment.
This process involved a lot of paperwork and hassle. It’s no secret that paperwork is not only cumbersome but also expensive and time-consuming.
Earlier, due to the technological barrier, automated payments were preferred by large businesses and financial institutions only. It was most commonly used for:
- House Mortgage payments
- Utility bills
- Mobile Phone bills
- Streaming Subscriptions
- Car Loan payment
- Student Loan payments
With platforms like Subscribie, even small subscription service businesses can easily accept automated recurring payments.
Automated recurring payments are gaining popularity not only amongst customers but businesses also.
Let’s understand how these payments are a win-win situation for both of them:
1- Reduce collection time and effort
Automated payments take the burden off your shoulders. No need to be continuously following up with your customers for payment at the start of every month. With payment automation, you no longer have to deal with instances of late payments. It enables you to better secure the cash flow of your business.
2- More customers
Charging a small amount every month instead of asking a hefty amount upfront makes your product or service more affordable. It means more customers can try your services, and you can easily convert your leads into paying clients.
3- Customer loyalty
In recurring payments, you have a long-term relationship with the customer. You are always on top of the mind of your end-users. With automated recurring payments, you are in a unique and best position to pitch your customers for up selling and cross-selling. It enables you to increase the Customer Lifetime Value (CLV) and makes your subscription service business sustainable and profitable in the long term.
4- Predict revenue with confidence
With recurring payments, you can easily project the revenue of upcoming months. It helps you to plan your expenses accordingly and make expansion plans well in time.
Conclusion
With the advancement of technology, we have come a long way in accepting automated recurring payments. Subscribie further simplifies the process by managing all the tech stack and enabling the businesses to get paid on time, every time.