Imagine being able to set up invoicing automatically, according to your schedule. Using recurring payments with ACH, you have just that.
Recurring payments allow you (or your customers) to directly debit or credit an account, according to a set billing cycle. Actum makes it easy to automatically bill customers, whether it be on a daily, weekly, bi-weekly, monthly, semi-annual, or annual basis. Whether you’re a small business or an enterprise, here are a few common ways that recurring payments can benefit your industry:
- Auto pay for business and consumer loans
- Bill payment schedules for utilities, real estate, and parking facilities
- Monthly entertainment subscriptions, gym memberships, or nonprofit donations
- SaaS subscription-based models
Reduce involuntary payment churn
As a business owner, you need to ensure that your customer acquisition exceeds your churn (when a customer stops paying for your service). And the more efficient your renewal process, the fewer customers you will have churn out due to a payment issue.
It’s important to keep in mind that churn can be either voluntary or involuntary. Voluntary churn describes a conscious choice by a customer to leave your service, while involuntary churn occurs when a customer does not intend to leave. Involuntary churn happens for a number of common reasons, ranging from customers forgetting to update their card details, to lost or stolen cards, to manual errors, to customers exceeding their credit limits. While it can easily go unnoticed, it can just as easily impact your bottom line.
How can you reduce involuntary payment churn? There are a number of recommended actions but it’s worth noting that most reasons for involuntary churn are linked to debit and credit cards. It’s estimated that an average of 13% of recurring transactions using debit and credit cards are declined each month. Moreover, according to recent research from IBM, 16% of SaaS survey respondents reported cancelled subscriptions after forgetting to update their payment information when receiving a new credit card. Avoiding card networks altogether could be an effective way for businesses to reduce involuntary payment churn.
ACH processing as a recurring payment solution
ACH direct debits help solve involuntary churn. By design, they’re ideal for handling auto pay and subscriptions.
Using ACH for recurring transactions has far lower passive churn because payment schedules are linked to consumer bank accounts, rather than debit or credit cards. Bank account information is changed significantly less frequently than debit or credit cards, because it does not expire, get lost, or get stolen. Using bank transfers for automatic payments not only improves the customer experience; it also helps reinforce the predictability of your revenue stream.
Some processors can charge an extra monthly fee for setting up this solution. Actum, however, offers built-in recurring payments at no added cost, on top of our already low processing fees.
When ACH bank transfers are initiated for recurring transactions, all that’s needed is the customer’s bank routing and account number. Or even better, they can log into their bank account using our Authentecheck service to authorize payments using only their online banking credentials. Whether you use Actum’s standard ACH or Authentecheck solution, our portal and APIs make it fast and easy to schedule recurring payments.
To dive deeper into how ACH processing works, you can learn more at the following link: ACH 101: Understanding the Automated Clearing House.
While it’s important to acquire new customers for your business, reducing payment churn from your existing customer base can also impact your bottom line. ACH transfers with Actum are an effective solution to involuntary payment churn.
For more information about working with Actum, please Contact Us!