All about recurring payment architectures

June 18, 2021


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Thanks to technology, we have changed the way we do, and pay, for many things. From the way we pay for products like clothes, phones or even food, to the way we access different services. Time ago, paying for the internet was not possible, much less if it was about paying things on a recurring basis, without even having to take the time to make the payment ourselves. Nowadays, thanks to the internet, and to the APIS, it is possible to implement recurring payment solutions that allow customers to pay automatically, without having to do a manual process every time they want to buy something. This model of recurring payment architectures is not something new, and in fact, has been present for a couple of years already, but, you know what ?, Do you know how APIs can help us create these architectures? Here at Rootstack we have carried out this type of project before, and today, we want to take the time to tell you everything you need to know about this payment method, and the solution that we can take to your company. ##Recurring payments: The new way to pay for your services Before talking about the architecture of recurring payments themselves and how different APIs have influenced this particular solution can be carried out, it is necessary to talk about what are recurring payments. Now, as the name implies, recurring payments refer to automated payment systems that are executed in a defined period of time automatically, always on the same date, always in the same way. To put it in simpler words, recurring payments are basically an online platform that allows different businesses, companies or companies to automatically collect, from time to time, their clients, without these having to be really involved in the process . It is important to note that online payments and recurring payment systems are not the same, although they are quite similar, the structure behind these methods involve different steps. To put it in context, platforms such as Amazon, Ebay and even the famous Wish website allow you to make payments online with your credit, debit card or even PayPal. However, this process only occurs when you decide to make a purchase, and you must enter your data manually each time you want to make an online purchase. On the contrary, the recurrent payment systems are used in online platforms of the different services that we use daily such as Internet, Water and even television cable. In these specific cases, the payment for the service is made once a month or weekly, depending on your payment method, and is automatically charged to your debit or credit card. It is important to mention that these systems are not only used to pay for services, they are also used to pay for products or online subscriptions. ##Recurring payment systems through APIs APIs, also known as "Application Programming Interface" , are precisely that, interfaces that allow communication between different types of software. However, APIs are used to build different types of architectures, including recurring payment architectures, since they serve as the intermediary between the software systems that are involved in the transaction of a payment. You should think of the APIs as the intermediary between your recurring payment system, and the data system to which the customer's credit or debit card belongs, who wishes to subscribe or pay for a service / product on your website. Basically, it is through these interfaces that your platform will manage to communicate with the bank's software, being able to carry out the payment automatically, quickly and easily. ##Application of recurring payment architectures The great thing about this type of architecture is that they can be applied to industries of different sectors through different methods, but always maintaining the same concept and the same goal always: Automate recurring payments In other words, the solution itself is to implement a platform for recurring payments through APIs or programming application interfaces, but adapting them to the online structure of your company, company or platform. The solution of recurring payment architectures will be applied depending on how the structure of your online platform, your database and your PR is. Based on these three points, we will seek to apply the base concept, which is: Automate the payment method administration process, automate the card collection process of customers, and automate the payment application process in basis to the collections made. ##APIs for recurring payments in different industries We have already mentioned how this particular solution can be adapted to any type of industry in which a payment transaction is necessary, however, it is necessary to touch more thoroughly as each industry can benefit from this type of platform. ###Retail The retail industry is perhaps one of the largest today, and is based precisely on companies or companies that specialize in the direct marketing of products to the buyer or end user. Basically, any company that sells products in large quantities to the public. Now, when you look at the Retail industry, it becomes obvious why it is necessary to implement recurring payment architectures, especially if that company has an online platform through which its customers can acquire their products. Let's take a look at the platform of Cochez y Cía, a company that sells and distributes all types of construction materials and to which Rootstack helped to implement a recurring payment architecture through which its customers could acquire their products on a regular basis without need to have to go through a manual payment system every month. Companies, companies and sales platforms such as Cochez and Cía can benefit from a series of advantages that this type of solution provides: 1. Reduction of costs: By automating the payment process, you will not have to spend on materials (papers, invoices, ink ...) as well as saving money in payroll to employees who usually take care of this task. 2. Increase customer satisfaction: Nobody likes having to deal with payments, let alone a customer. Implementing this payment method will allow you to keep your current and future customers satisfied, without having to worry about annoying payment procedures. 3. Attract more customers: A recurring payment platform through which everything is brought online attracts more customers naturally, since for them, it represents an extra benefit. ###Home services (Light, cable, water, telephone and internet) In the same way that the Retailing industry can benefit from a recurring payment architecture, it can be done by the industries that offer a service instead of a product. The way in which this architecture is applied will vary according to the platform of said service, however, once applied it will allow you to reduce risks such as payment delays, delinquent clients or unnecessary cancellations. Implementing recurrent payment systems will allow you as a company: 1. Debt payments automatically according to the defined time 2. Keep clients' debt up to date, without delays. 3. Have greater customer retention. 4. Implement increases or reduction of collection costs automatically, without disturbing the customer. Meanwhile, as a customer, people can enjoy benefits such as: 1. Receive automatic notifications every month / week that the payment has been made. 2. Avoid cutting services for non-payment. 3. Not having to worry about making payments manually on a monthly or weekly basis. ###Other industries (Telecommunications, technology services, web pages ...) Telecommunication companies such as telephone companies, cable companies, companies that offer technology or support services, web pages or platforms such as Netflix, Spotify or WestLaw also benefit from this type of architecture. Being companies (mostly) purely online, the need to have a recurring payment architecture that ensures that customers or subscribers comply with their payments properly, is necessary. And that is precisely what this solution offers. The APIs allow adapting this concept to any industry, allowing you to provide your customers or subscribers with an easy way to deal with monthly or weekly collections. ##Recurring payments: The solution you were waiting for Last but not least, take a look at this example: Suppose you own a company that offers nutritional advice through different plans, which are charged monthly. Now, suppose you have a total of 12,000 people subscribed. We are talking about 12,000 customers with 12,000 different credit or debit cards, making payments on different days of the month, every month. If only 5% of those people decide to change their credit or debit card or simply change to another plan during a month, it would be approximately 600 people monthly changing their type and amount of payment. We are talking about that a single employee should not only process 600 new payment methods, but deal with another 11,400 recurring payment invoices, something that a single employee will not be able to do for himself, which results in salary expenses at hire more employees to carry out the same management. On the contrary, if you decide to apply a recurring payment architecture in your platform, not only could you automatically reduce the expenses in payroll, but also increase the productivity of your team, and reduce the risks and margin of errors by charging almost 100% A solution of recurring payment architectures is necessary today, no matter which company you have, or in which industry you develop, and here at Rootstack we can help you create and implement this solution in a simple and effective way.