Recurring payments, sometimes called subscription payments, or autopay, are a way for a merchant to collect payment from a customer’s bank account on a repeat basis.
One of the most well-known methods for recurring payments is Direct Debit. But there are various ways to set up this type of payment. As a merchant though, you need to ensure your account has the ability to accept recurring payments.
There are two types of recurring payments, fixed and variable. As the names suggest, fixed means the same amount is deducted from the customer's account each time. Many subscription services work this way with a fixed charge each month. Whereas variable means the amount is dependent on the customer's usage of the product or service. For example, an energy bill.
Allowing recurring payments has benefits for both the merchant and the customer. It makes the whole payment process easier for customers as they just need to set it up once. And it reduces the number of late or missed payments for the merchant, meaning you have a more stable and predictable cash flow.