Payment solution PayFast announced in late July that it is introducing recurring billing for online stores. Yes, you heard that correct. A reputable South African payment solution with recurring payments. This makes subscription based services easier, and will likely provide a boost to businesses in a wide range of industries. In there announcement, they outline the two methods of recurring payments:
The feature enables numerous business models, activities and applications. At launch, the service will allow for merchants to create two methods of recurring payments; one being a subscription model, the other an ad hoc model. The subscription model supports membership or retainer style business models that provide stable and predictable income. The ad hoc payment solution enables applications such as app payments, single page checkout, or automatic account top ups. Read up on the details of each and how to enable recurring billing for yourself.
The true value of the subscription business model is in its predictability. Billing is automated and long-term financial planning is easier as future payments are almost guaranteed.
A typical service is server hosting. The customer is billed on a monthly basis for a set fee. Traditionally in South Africa this billing model has been implemented by means of a debit order. Our subscriptions offering, however, shifts towards a credit card-based payment model. In line with global trends, it offers a more streamlined solution to the merchant with greater customer convenience and control.
Ad hoc payments
An ad hoc recurring payments solution sounds something like a contradiction in terms, invoking both regularity and irregularity. It is precisely that combination that adds a multitude of additional applications to the function of recurring billing. The relational aspect of the transaction is the recurring part – the buyer and seller enter into an agreement where the buyer authorises the seller to charge their credit card for an agreed purpose. However, the amount paid and transaction dates can differ for future individual payments.
Let’s look at some examples of how this feature could be implemented. Say you want to monetise your app. Authorising each and every transaction is an obstacle to the customer experience. PayFast’s Ad hoc payments would streamline the process, allowing automated app purchasing after the first transaction has been authorised, for future use.
Or, you have an e-commerce business. Ad hoc payments offer huge value for web based stores where customer loyalty is key. Through the use of tokenization you can now access customer purchasing details, and offer a single page checkout.