How to choose the right online payment service for your subscription business

“Subscription is a powerful business model because it creates an environment where the default customer behavior is retention, as opposed to one where the default behavior is churn.” - Eric Stromberg

Online payment options have expanded, with debit and credit cards, contactless payments, mobile wallets, and other methods readily available. But consumers aren't the only ones who can benefit from the convenience of a quick purchase. Automatic digital payments are quickly becoming the preferred way to pay for businesses with recurring expenses.

Many people assume that running a subscription business is easy, but big companies with recurring payment models know this is anything but the case. Without effective systems in place, company order can quickly turn to chaos. Subscription businesses need reliable tools to help them gain and keep subscribers; the more user-friendly and automatic the payment process, the better.

Why are online payment services necessary for subscription businesses?

If you run a large enterprise, there's little chance your team can keep track of everything manually. Plus, using an online payment service geared toward small businesses and solopreneurs won't be enough to prevent mistakes and still give you a 360-degree view of what's happening. This means scaling subscription businesses need something more robust.

A reliable online payment service will:

Decrease the busywork

Rather than keep your team bogged down in detail-oriented tasks, an efficient payment processor frees them to focus on being more customer-centric. No longer will they need to handle tedious payment and accounting tasks. Instead, your team will get to use their expertise to do the job you hired them to do.

Reduce late payments

Your customers are busy, and things happen. For example, they may need to upgrade their card on file but don't do it in time for their recurring payment. An online payment service can create backups so that your subscribers never miss a payment. This eliminates involuntary churn from subscribers who are committed to your company but simply forgot to update their information.

Build trust with clients

It's no secret: A smooth customer experience builds trust and reduces friction where it matters most: during the checkout process. When clients see that their payment information is secure and your system is reliable, they can feel comfortable doing business with you long-term. The more hurdles they must jump during the checkout process, the more decision fatigue sets in.

Save time and money

Get a leg up on financial reporting and avoid delegating tasks out to third parties. A payment processor will assist with things like monitoring for gateway outages and simplifying invoicing and customer checkout. With gateway outage monitoring, you can rest easy knowing your clients can pay without technical glitches 24/7.

Keep data secure

Data breaches and other cyber crimes are becoming more sophisticated every day, and unfortunately, companies managing large amounts of personal payment information are a prime target. However, the best online payment service providers can keep you from being a sitting duck for cyber attacks. Partnering up with a payment processor will help you stay 10 steps ahead of hackers without having to do the research yourself.

Understanding online payment terminology

Choosing an online payment service is hard enough without all the confusing terms. And with the variety of different services offered, things get even more difficult to grasp. Here are the key terms that subscription businesses need to know:

Payment gateways

A payment gateway authorizes credit card payments for both online and brick-and-mortar businesses. Gateways send the payment information to your payment processor and are typically provided by banks and financial service providers. They are essential for secure transactions, but they're not the only element of a strong subscription payment model. As your business scales, you can add or change payment gateways to meet your needs. Learn more about payment gateways like Amazon Pay and PayPal and how to integrate with them using Recurly.

Online payment services

Online payment service providers work behind the scenes to facilitate safe transactions through the payment gateway. They will also monitor for gateway outages and arrange backup gateways as needed so you never lose subscribers due to technical errors. The same company may provide payment gateways and services, but this is not always the case.

Subscription and billing management services

Subscription and billing management services ensure that the right charges go to the right accounts each payment cycle. They can also help you test out pricing plans, experiment with new products, and quickly adapt to changing customer expectations.

In short, the payment gateway for online payment processing services is much like a digital POS system for your financial transactions with customers. Meanwhile, online payment services facilitate these transactions, providing fraud protection, e-commerce integration, and a rich well of customer data. Subscription and billing management services fill in the details, allowing companies to seamlessly track activities and important details associated with transactions. Providers of this service assist businesses in monitoring sales, accounting, and marketing activities to achieve maximum results.

What to look for in an online payment service

A plethora of choices for online payment processors can lead business owners and professionals to a place of extreme confusion. Thankfully, there are general criteria that an online payment service should meet.

Every respected payment service will meet and likely exceed the following criteria in their quest to serve merchants better.

Automation

A top online payment processor will automate elements of your financial reporting and streamline your accounting process for good. While you'll still have hands-on control and the ability to make changes from your dashboard, your payment processor handles much of the heavy lifting so tax time is a breeze.

Revenue-supporting features

The best online payment services prioritize helping you prevent churn and grow your subscriber base. When you review examples of online payment services, you'll see how they have features that make revenue growth goals more visible, objective, and easy to track.

Data organization

Subscription businesses can have a hard time managing invoices and scaling strategically as things grow more complex. But it's critical to maintain a smooth experience for subscribers, keep track of various revenue sources, and find new avenues for growth. An online payment service will help you organize customer data, accounting information, and other critical reports.

Payment options

The top online payment services offer flexible payment gateways that give your customers many ways to pay. They'll also accept payments from nearly every country in the world, helping you expand into new markets and accept payments of any currency type.

Easy setup

As a subscription business, you cannot afford website downtime or a lengthy transition process to a new payment system. Thankfully, the best online payment processors won't require any coding or drawn-out setup processes. You can customize payment portals to match your brand aesthetic with billing, shipping, tax, and coupon information ready to go.

Getting started

A study from The Global Banking and Finance Review revealed that 70% of surveyed leaders named subscription business models as the key to their future success. However, 48% of subscription businesses in another study reported consistently struggling to resolve reporting and accounting challenges. With more data to manage than ever before, subscription businesses have their work cut out for them. But an online payments service can offer a better customer experience and peace of mind for company leaders.

Recurly is a subscription management and billing platform that frees your team to focus more on customers, increase conversions, and meet your goals faster. Optimize and streamline your payment process and never worry about not getting paid again. Learn more.