Subscription business– The business model that started off with Newspapers and magazines in 1600 has now become the most adopted one.

This trending subscription business model in the 21st century is likely to become the future of business just like Tien Tzuo said :

Subscription business model

Though subscription business could rule out other business models, there is a biggest challenge for merchants who are in it.

The real challenge

The revenue of subscription business is 100% dependent on the recurring payments from the subscribers. When these recurring payments are unregulated and are left unmonitored, there could easily be payment defaults leading to a major setback in business eventually.

So, is the revenue at risk when the merchants shift to subscription business? Not really, provided they play it smart in terms of “payment collection”. The real challenge lies in collecting recurring payments without fail.

If you are a merchant who is into subscription business and if you are still wondering how to deal with payment collection, here are some tips for you,

Tip 1: ‘Never leave payment initiation to your subscribers’.

Do not wait or expect payment initiation from your customers. Instead, stick to these two methods that are proven successful in terms of collecting recurring payments.

Direct debit

Tip 2: Choose direct debit over auto debit.

While both these methods have their own advantages, direct debit would be a wiser and safer choice for you no matter what recurring payment type you are dealing with.

Here is why DIRECT DEBIT is a better choice than AUTO DEBIT

In Malaysia, the credit card users are comparatively less, which might limit the access to your business if you are offering auto debit as a payment option. Whereas, Direct debit widens accessibility covering all the customers with bank accounts.

The cost per transaction is lesser in direct debit than in auto debit.

Direct debit

The payment collection in direct debit will remain seamless as long as your customers’ bank account exists, but in auto debit, the collection will come to a halt when the card expires. Not to mention, the card limit set in your customers’ credit cards could also hinder your payment collection.

Besides, with the introduction of Dynamic Virtual Cards by Alliance Bank, it is going to be a lot more challenging to collect payments through auto debit.

Direct debit and auto debit

Considering all the above factors, the futuristic, reliable payment collection option for recurring payments would be “Direct Debit”.

But are you thinking that you don’t want to stick to offering just one payment option for your customers? Then there is a bonus tip for you!

Bonus Tip: Entrust your payment collection to a payment service provider

If you want to give more than one payment option for your customers, then the best way is to integrate a payment service provider as “RinggitPay” that provides multiple payment options. Whether you choose auto debit or direct debit, RinggitPay has it covered for you. How?

RinggitPay, with its easy customer onboarding facility and with its auxiliary yet key features such as e-invoices, payment reminders via push notifications, eases your burden of collecting payments on time, be it through auto debit or direct debit.

It also lets you offer other payment options such as forms2pay, payment links, and e-wallets from which your customers can choose what works the best for them. The additional features such as payment reminders, e-invoices, e-receipts etc., are extremely useful for managing and reconciling mass payments. Check out the “smart collect” payment suite by RinggitPay to know each feature in detail.