All about recurring payment architectures

Thanks to technology, we've revolutionized the way we do and pay for many things. From purchasing products like clothes, phones, and food, to accessing various services, our methods have evolved dramatically.

In the past, paying for services like the internet was not possible, especially recurring payments that didn’t require manual intervention. Today, however, the internet and APIs have enabled us to implement recurring payment solutions that allow customers to pay automatically, without having to manually process each transaction.

Recurring Payments: A New Way to Pay

Before diving into the architecture of recurring payments and the role of APIs, it’s essential to understand what recurring payments are. As the name implies, recurring payments refer to automated payment systems executed at defined intervals—monthly, weekly, or otherwise—without manual input.

In simpler terms, recurring payments are online platforms that allow businesses to automatically collect payments from their clients regularly, without needing the clients to be actively involved in the process each time.

While online payments and recurring payment systems are similar, they involve different processes. For example, platforms like Amazon and eBay allow you to make payments online with your credit, debit card, or PayPal, but you must enter your payment details each time manually.

In contrast, recurring payment systems are often used for services we use daily, like internet, water, and cable TV. In these cases, the payment is automatically charged to your credit or debit card at regular intervals, without needing your manual input.

Recurring Payment Systems Through APIs

APIs (Application Programming Interfaces) facilitate communication between different software systems and are crucial in building recurring payment architectures. They serve as intermediaries between the software systems involved in the transaction, allowing your platform to communicate with the bank’s software to process payments automatically and seamlessly.

Application of Recurring Payment Architectures

The beauty of recurring payment architectures is that they can be applied across various industries while maintaining the core goal: automating recurring payments. The solution involves implementing a platform for recurring payments through APIs, tailored to your company's online structure, database, and payment system.

APIs for Recurring Payments in Different Industries

Retail

The retail industry, which focuses on the direct sale of products to consumers, can greatly benefit from implementing recurring payment architectures, especially for online platforms. For example, Rootstack helped Cochez y Cía, a construction materials company, implement a recurring payment architecture, allowing their customers to purchase products regularly without manually processing payments every month.

Some benefits for retail companies include:

1. Cost Reduction: Automating the payment process reduces the need for physical materials (paper, invoices, ink) and saves on payroll for employees who typically handle these tasks.
2. Increased Customer Satisfaction: Automating payments eliminates the hassle for customers, keeping them satisfied and loyal.
3. Attracting More Customers: An online recurring payment platform naturally attracts more customers, offering them convenience and ease of use.

Home Services (Electricity, Cable, Water, Telephone, Internet)

Industries offering services rather than products can also benefit from recurring payment architectures. For example, implementing these systems reduces risks like payment delays and unnecessary cancellations. Benefits include:

1. Automatic Debt Payments: Payments are debited automatically at defined intervals.
2. Up-to-Date Client Accounts: Customers' debts are kept current without delays.
3. Improved Customer Retention: Automated systems increase the likelihood of retaining clients.
4. Automatic Adjustment of Fees: Implementing price increases or reductions automatically without disturbing the customer.

For customers, the benefits include:

1. Automatic Payment Notifications: Customers receive notifications when payments are made.
2. Avoid Service Interruptions: Payments are processed automatically, reducing the risk of service cuts due to non-payment.
3. No Manual Payments: Customers don’t need to worry about making manual payments regularly.

Other Industries (Telecommunications, Technology Services, Websites)

Telecommunication companies, technology service providers, and online platforms like Netflix, Spotify, or WestLaw also benefit from recurring payment architectures. These companies, often operating purely online, need systems that ensure customers or subscribers comply with their payments, and APIs make it possible to adapt this solution to any industry.

Recurring Payments: The Solution You’ve Been Waiting For

Consider this example: Suppose you own a company offering nutritional advice through monthly subscription plans. With 12,000 subscribers, processing payments manually for each one would be overwhelming, especially if some customers change their payment methods monthly. Implementing a recurring payment architecture could reduce payroll expenses, increase team productivity, and minimize errors, making it a necessary solution for modern businesses.

At Rootstack, we can help you create and implement this solution effectively, no matter your industry or company size.