You've probably heard of subscription payment processing, but do you really know what it is? It's a way to get paid on a recurring basis (like your utility bill), and it's growing in popularity among business owners. But there are a lot of misconceptions about how subscription payment processing works—and whether or not it's right for your business. Here are five tricks about subscription payment processing you may have missed:
Payment processors cost more than you realize
While payment processors may seem like a simple way to accept payments online, they actually carry some hidden costs. Payment processors charge a percentage of each transaction as a fee. The percentage varies by processor and can be as low as 2% or as high as 5%. Most payment processors charge somewhere between 3% and 4%.
The cost of using a payment processor isn't just the fee itself; it's also the fact that this money is deducted from your revenue before you get paid by the customer! So if you're selling something for $100 but have to give away 20% (or even more) in fees, what does that mean for your profit?
You can get paid with a few clicks
You can set up recurring payments in a few minutes.
Recurring payments are the easiest way to get paid, but they can be tricky to set up. Fortunately, there's a tool called Recurly that makes it easy! Just sign up for an account with them and enter your information, then add the subscription(s) you want to accept payments for on their website or app. They'll take care of everything else–and if something goes wrong later down the road (like a customer not paying), they have excellent customer service reps who will help resolve any issues quickly and efficiently.
Payment processors take a bite out of your payment
The third thing you should know is that payment processors take a bite out of your payment.
Payment processors are a middleman, so they charge a fee for their services. This means that when you receive money from customers, there's some of that money left over–and it goes straight into the pocket of your payment processor. The percentage varies according to what kind of business you have (e-commerce vs subscription box), but it's generally somewhere between 2% and 5%.
Some payment processors are better than others
Payment processing can be expensive, which is why it's important to do your research and find the right payment processor for your business. While most payment processors offer similar services, some are better than others at providing those services.
While there are several different types of payment processors available on the market today (see below), it's important to know that not all of them will work for every business type or size. If you're unsure whether a particular payment processor will meet your needs as an entrepreneur, ask yourself these six questions:
- What kind of merchant account do I need?
- How much does it cost?
- Where can I get one?
- How much time do I have before my next sale?
- Can this process be done online or by phone only?
- Will this affect my bottom line positively or negatively once implemented?
Subscription payments are becoming popular, but they're not completely mainstream yet
Why aren't subscription payments as mainstream as they could be? Because most businesses don't know how to manage them effectively.
How do you make sure your business is ready for the rise of subscriptions? Start by learning these 5 tricks about subscription payment processing:
Still looking for ways to make your business revenue more reliable? Consider offering subscription-based payment options for your customers
Subscription-based payment options are becoming more popular. The rise of services like Netflix and Amazon Prime have shown that consumers are willing to pay for access to content over time, which is why subscription payment processing is a great way to get consistent revenue.
Subscription payments have been around for a while now, but they're not exclusive to digital goods: you can also use them as an alternative form of payment for physical products or services (like monthly magazine subscriptions).
If you're looking for an easy way to get paid by your customers on a regular basis without having too much overhead cost associated with running your own merchant account–and especially if you want some sort of recurring revenue stream–subscription processors are probably worth investigating further!
We hope you found this article helpful. If you're still looking for ways to make your business revenue more reliable, consider offering subscription-based payment options for your customers. The five tricks we discussed above can help ensure that your company stays on track with its finances and keeps growing steadily over time!