Recurring Billing Merchant Account: Use an All-in-One Platform for Subscription Success

Collecting recurring payments is a straight-forward process, but to get the most out of your subscription management operations opt for a recurring billing merchant account. Discover the flexibility and added-benefits that come from using the advanced subscription capabilities of an all-in-one monetization platform.

Intro

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Subscription merchant accounts are one of the most efficient ways to accept recurring billing. Merchants selling digital goods or online services make use of recurring merchant accounts to collect periodic subscription or membership payments from their users. Unlike the sale of one-time goods, recurring contracts require that funds be charged from customers' payment methods at set intervals. To ensure the right processes are in place to handle these transactions repeatedly, companies employ merchant accounts for recurring billing, which ultimately bring a lot of benefits for the companies selling subscriptions.

Discover the advantages of subscription-based merchant accounts.

Advantages of Subscription Merchant Accounts

Advantages of Subscription Merchant Accounts
Multiple pricing & packaging models available
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Multiple pricing & packaging models available

With merchant accounts that allow recurring payments, you can set up multiple ways through which customers can pay for your offering. Create packages based on tiers, user location, or subscription lifecycle length, that are suitable for multiple audiences and enable your pricing strategies depending on the types of products you are selling, from fixed rates, cost-plus, dynamic, or usage-based to trial memberships, or installments.

You can also choose whatever recurring payment interval is necessary, whether it is weekly, monthly, annually, or another customer preference. This way, buyers can select the payment plan that is suitable for their needs and enjoy different pricing rates. For example, with your recurring merchant account, you can set a certain price for monthly payments, and a slightly smaller rate pertaining to annual payments, which could incentivize some customers to pay in advance for your services.

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With 2Checkout's subscription merchant account, you can set the billing interval to any period that makes sense. You also have access to pre- and post-paid billing and can choose to have the first payment be different from subsequent ones, when offering free trials or other types of promotional tactics.
Multi-channel payment processing
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Multi-channel payment processing
In today's world, B2C and B2B merchant sales are usually conducted on multiple channels, beyond the company's own website. A merchant account for recurring billing should help you accept recurring payments on all sales channels, including your own site, marketplaces, mobile payments in apps, or partner websites. A subscription model merchant account offers the possibility to monetize all of these channels and more, making it easy to accept payments under the same terms and clause, and with the same or different pricing, on all of them.
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2Checkout allows you to support subscriptions on all direct and indirect channels. Take advantage of our partner tools and make the most of sales and renewals for subscriptions and combinations, while keeping accurate partner attribution and minimizing channel conflict.
Automatic re-billing that helps you fight churn
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Automatic re-billing that helps you fight churn
There are multiple scenarios that can increase your churn rates. Subscription-based products imply that you charge your customers periodically, but what happens if a payment fails during the process because your customer doesn't have enough funds or their card expires? Or what do you do if a customer decides to cancel their subscription?
Involuntary churn
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Involuntary Churn

Automatic retries are necessary in this case and your recurring billing merchant account will handle this step. In case of a soft decline for a transaction, your platform should automatically retransmit it for approval, after a period of time set by you.

Automatic Updater capabilities are also highly important when it comes to rebilling, as these tools can salvage up to 20% of lost revenue. The goal of these tools is to provide billing continuity, for example in the case of expired cards, by automatically updating the payment method's details so that the second re-try attempt is successful.

Voluntary churn
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Voluntary churn

Auto-renewal enrollment campaigns are a great way to proactively entice shoppers to enroll for recurring billing programs. Set up email campaigns where you invite users to switch to auto-renewals, emphasizing the added convenience versus manual renewals, and also offering an incentive (such as a discount) for those who switch.

For customers who are considering ending their subscription, employ reactive churn prevention tools to try to get them to stick around. Set up cancellation flows and email campaigns, enticing them with grace periods or renewal discounts to continue their usage of your product. Offering discounts is a good approach for users who have signaled they want to cancel their auto-renewals.

Dunning management, through email notifications, reminders and in-product messaging, are also of big help in informing your users when their subscription expiration is coming up. These touchpoints also allow your customers to easily renew their recurring contracts.

Options to pausing subscriptions from your eCommerce provider are also an excellent means to keep subscribers on for longer. If shoppers show intention to cancel, give them the option to pause the subscription for a set period, as an alternative to cancelling.

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2Checkout uses multiple account updaters, both internal and from credit card associations, such as Visa, to increase your authorization rates for out-of-date cards.
Security and integration
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Security and integration

Another need-to-have benefit that comes with subscription-based merchant accounts is the reinforced security you get throughout your payment processes. As you would imagine, recurring payments are that much more susceptible to fraud, which is why you have to double down on protection.

A recurring merchant account consolidates your security in multiple ways. Firstly, it offers Level 1 PCI-DSS compliance out of the box and often reduces your own compliance workload, because all your payments are being processes with a checkout hosted by the merchant account, which collects sensitive payment data in a secured vault, thus you don't have to store it on your servers. However, if you wish to have full control over the integration process and host your own checkout experience you can use the API integration. This integration method can also allow you to accept recurring payments but your company needs to be PCI DSS compliant Level 1 which comes with a long list of requirements.

Second, it uses encryption and tokenization on the data you're transacting. This means that each payment has its own unique token, so that sensitive data such as card data or user personal data is never stored as is, but is encrypted and stored via token in the gateway's vault. At each recurring billing payment interval, your payment supplier will use the encrypted token and not the actual card data for the transaction.

Last but not least, your recurring billing merchant account should also have an anti-money laundering layer of automatic protection, safeguarding you against criminal activities and those individuals who would try to generate illegal profits from your eCommerce business.

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With 2Checkout you can outsource compliance and implementation of regulations governing the secure usage of payment methods, ensuring peace of mind even for your most reluctant prospects.
Risk mitigation support
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Risk mitigation support

Once you have an approval for your subscription merchant account, your provider can also help work alongside you to lower the level of risk associated with your recurring contracts. A merchant account with subscription pricing helps you handle complaints, refunds, and requests for chargebacks, ensuring you don't cross a level of risk that would expose your business.

To keep risk low, companies selling subscriptions need to also comply with card association subscription mandates. Compliance can be achieved through your subscription merchant account, which ensures all conditions of these requirements are respected. For first-time transactions this includes asking for consent prior to the transaction, separately outlining the terms of the recurring payment, and conducting an account verification request. For recurring payments this means keeping customers apprised at all points of what payments were/are to be processed, authorizing each subsequent transaction, and offering easy, direct ways to cancel or update subscription terms and payment methods.

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A high chargeback rate can indicate several business deficiencies. Discover how to address chargeback issues with the 2Checkout all-in-one platform.
Customer service
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Customer service

Choice of selling subscription products or services also impacts your customers' expectations of the support offered. Since your relationship with the client is ongoing and long-term (the goal being to keep the customer around for as long as possible), you need to offer customer support at multiple points in the journey.

The platform provider acting as your merchant account for recurring billing usually helps you with user support as well. This means offering self-service options, like an online shopper account for managing the subscription, and even direct or assisted support with real sales reps, via email, phone, or chat.

In terms of servicing customers, subscriptions platforms also offload a lot of work associated with onboarding and activation, as SaaS companies have discovered in recent years.

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The way you service your subscribers can tell us just how optimized or not your retention strategy is. Discover how 2Checkout can help monetize business areas that are currently underperforming.

Conclusion

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Why 2Checkout for Your Subscription Merchant Account?

2Checkout's flexible subscription merchant account capabilities are designed for software, SaaS, and cloud services, helping you offer customer-centric experiences and build loyalty. Our subscription management capabilities allow you to launch products easily, maximize recurring revenue across channels and at each touchpoint, and better retain and service your customers. You'll be able to:

  • Sell subscriptions easily across channels, maximizing each touchpoint;
  • Offer consumer-favorite billing models and accepted payment methods (including for B2B recurring billing merchant accounts);
  • Employ automatic updater and re-billing tools to safeguard your MRR;
  • Protect your customer data with up-to-date security protocols and tools;
  • Mitigate risk and stop bleeding revenue;
  • Service your customers with pleasant, consistent user journeys.
Want to learn more about our subscription-based merchant accounts?
Talk to one of our subscription experts today.
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